Investing for retirement for we Baby Boomers means we're putting assets away during the later stage of our working lives. Those of us in the last ten years of full time employment have to be careful about preserving our nest egg while still getting returns that run ahead of inflation. While those of us who still have more than 10 years of full time earnings to look forward to can continue to invest with more riskier instruments as we will still have time to recover if the markets take some big losses in the next 10 years.
Probably the most important investment a Baby Boomer can make is to eliminate as much debt as you can before your income drops significantly. The fewer bills and interest you have to keep paying after you retire will help you to come closer to maintaining the lifestyle you desire for your retirement. Home mortgages are usually the biggest debts you can eliminate before retiring followed by second homes, auto, boat and etc. loans as well as credit card debt.
Just remember that any debts you are carrying into your retirement will cost you interest that is likely higher than you will be earning on your investments! So, getting rid of as much, if not all, debt before you retire can prove to be one of the best actions that you can take.
A second thing you can do when investing for retirement at this late stage is to consistently set aside as much as you can for your retirement. Most pundits recommend that we Baby Boomers should be putting away at least 20% or more of our earnings.
Another factor you need to pay close attention to is the risk/reward ratios of your investments. Normally, the riskier the investment the greater your potential for rewards. However, you've got to be very careful about preserving your capital as you're going to be needing to draw from that capital for many years to come.
A concluding factor when it comes to investing for retirement is be aware of future tax consequences. Remember that any income you have that is taxable means that its real net value is after taxes. Many Baby Boomers are reconsidering their investment allocations with an eye on avoiding as much in taxes as possible in their retirement years.
Ultimately the real key to investing for your retirement is to make smart investments.
And maybe the best thing for you to do it is to find a good retirement planner.
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