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Smart Strategies for Effective Retirement Planning

By Donald W. Angel, CFP®, AIF®

The average employed American worker will fall short of her or his targeted retirement savings goal by an estimated $47,000*. Despite continued uncertain economic conditions and volatile financial market fluctuation, there are ways to take a higher degree of control over your retirement nest egg.
Here is a helpful checklist.
Don’t cash out. Most investors approaching age 65 watched with fear as their account values dropped over the past several years, including some plunges of more than 10 percent. One of the greatest risks of bailing is the opportunity to miss dramatic market upswings that historically follow recessions. It is virtually impossible to time the market correctly and move funds into higher-performing investments that will produce the returns you seek.
Regularly monitor the mix of your portfolio. “Balance” is a hallmark of a diversified retirement portfolio. Typically, when one investment vehicle loses value, another may increase. Over the long term, losses and gains may skew your allocation of assets away from your target goal. Your tolerance for risk may also change the closer you get to retirement age, or due to other health or unexpected family issues. In these cases, you may wish to re-balance how your portfolio is allocated. Your Certified Financial Planner™ can help you monitor and adjust your investment mix accordingly.
Save as much cash as you can afford to. One way to make sure you have enough cash for retirement is to save as much as you can right now. This can be difficult, as it is human nature to spend more when income increases, and many Americans already are maxed out with expenses. But in savings, every dollar counts. Consider putting funds aside on a regular, planned basis, regardless of when you expect to retire. Ways to accomplish this are through a tax-exempt individual retirement account (IRA) or a tax-deferred 401(k) plan.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.
Donald W. Angel, CFP®, AIF®, of Cottrill, Arbutina Wealth Management Group of Peters Township, is a registered representative with, and securities, financial planning and fee-based services are offered through, LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. For a longer version of this column, visit www.cottrillarbutina.com/wm/wm_archive.htm

* Source: Employee Benefit Research Institute, ERBI Notes, October 2010.

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