11 Strategies for Building a Strong Financial Future

For many would-be retirees, outliving their assets is their biggest fear. While retirement is an eagerly awaited milestone for many, the feeling is not the same for workers with bleak financial futures. If you’re looking forward to retirement but still don’t know if you’ll be financially secure, then you’re probably not going to be, since financial worries come from not having enough savings, assets, and investments. A community of retirees and retirees to-be share a wealth of strategies you can adopt to build financial security long before your post-work years.

1. Begin with the End in Mind

Planning for a financially secure future, according to one retiree, begins with having the end in mind. That’s one way to get it right years before your last day at work. What kind of retirement do you envision a few years from now? Would you be living miserly with your cash stack, or would there be passive income to substantiate savings? A clear picture of the postwork days can help you identify how best to prepare for it financially.

2. Never Leave it Too Late

Time is a powerful ally in wealth building, and the earlier you start to think about retirement, the likelier you’ll have enough money to enjoy the fruit of lifelong labor, several people advise. Prepare structures in advance that will guarantee your ability to sustain yourself when you’ve retired.

3. Grow Your Retirement Account

Take full advantage of employer-sponsored retirement plans like the 401k and IRA, one retiree counsels. “Do not joke with the 401(k)s and IRAs years before you retire. I contributed the maximum allowed in my days and was lucky to have an employer that matched my contributions.” A second person says employers matching your contribution is equivalent to earning free money.

4. Embrace Frugal Living

Frugal living doesn’t have to start a couple of years before retirement. If you don’t have a high-income source, thriftiness might be all you have to store up savings for investments and build alternate income.

5. Build Income Streams

You never know what tomorrow holds, one individual cautions, advising that people invest in multiple streams since even the seemingly immutable options can collapse under the weight of economic uncertainties. “Find additional income streams. Write a book, do consulting, or open a business. But don’t forget also to live your life in the present while you invest,” says one senior citizen who doubles as a pediatric consultant.

6. Invest with Prudence

While you build streams of income, aggressively investing without prudence is dangerous. It’s understandable you’re worried, but it would be worse if you lost your savings to high-risk opportunities. “Investment can be dicey and requires a lot of research and maybe some professional guidance,” one contributor says, adding that his one-way rule of deciding whether to invest in a business or not is the mantra, “If the profit potential is too high in the short term, it’s most likely high risk, and would lead to me losing my money [rather] than making a profit.”

7. Diversify Your Portfolio

If properly deployed, your pension can give you a big boost in retirement. One retiree quotes the Trinity Study and its 4% rule. “With a diversified portfolio of stocks and bonds, you can withdraw 4% per year and have your principal keep up with inflation for it to last 30 years or more,” he explains. A second person says if you diversify, you’re more likely insured when an asset dips among a few owned than you would if all your investments are on a single financial asset.

8. Manage Your Debt

Your debt profile can affect how much you have left to save and invest, and contributors advise people to manage their debt with utmost care. “More than a decade to my retirement, I cleared all high-interest debt to free more funds for savings and investment, one retiree explains.

9. Leverage on Tax-Advantage

Exploring tax-efficient investment options like Roth IRAs and Health Savings Accounts can give you some tax advantages. ‘’Your money could grow tax-free or tax-deferred with a tax-advantage investment or saving plan. And you could be saving so much off your taxes in the long run,’’ a financial advisor points out.

10. Be Flexible

As you prepare for your post-work years, things may not always go as planned. Many retirees-to-be say they try to stay financially insured to be willing to change strategy along the way. “Volatility is nearly unpredictable, and even the best laid out plan can go wrong,” a community member says. “The golden rule is to be flexible, and that could mean taking a different investment, savings, or business decision from your initial calculations,” he said.

11. Get Financial Education

The more financially educated you are long before retirement, the likelier it is that you’ll make informed decisions about post-work financial security. Members who enrolled in short courses on investment and financial management say it equipped them with the skill set to make informed decisions free of emotional bias.

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