The look of retirement as we know it is changing. The life of leisure we once looked forward to has been postponed. Many of retirement age are working beyond age 65. There are benefits to working longer. We remain connected to a community through our work. In addition, the requirement of the size of our retirement fund shrinks because we have fewer non-working years ahead of us.
The best way to prepare for retirement is to save money. This is easier said than done. Larry Burkett recommends developing a workable budget so you can “manage the money you earn in order to create a surplus to invest” (Investing for the Future p. 129). Once you have set aside money every month to be invested, where should you invest?
Chris Farrell divides savings into 2 categories-investing as a safety net and investing in high risk stocks and bonds. Saving and investing for retirement is a highly desirable safety net. In fact, “(t)he financial price for procrastinating is that you delay building a margin of safety” (The New Frugality: Consume Less, Save More, and Live Better p.114).
When it comes to establishing a financial safety net, choose investments that are low-risk and offer the most secure return. “You want to place this money in risk-free securities, and all the main safe options rely on U.S.-government backing rather than private sector promises. The trade-off for no-to-little risk savings is minimal return. It’s a reasonable trade-off” (p. 113).
- Utilize and maximize the retirement savings plan offered at your place of employment
- If self-employed, consider a SEP-IRA or a sole 401 (K)
- If your company doesn’t offer a retirement plan, set up your own IRA or Roth IRA