It is never too early to start thinking about your golden years. Make sure you're ready to take full advantage of your retirement. Here's how:
Make a plan. Decide what you want to do when you retire--do you want to travel? Move to Florida? Buy a second home? Estimate how much money you'll need to live on based on your goals, and start saving to reach that goal. Make sure you make realistic goals, and use realistic assumptions. Then stick with your plan.
Get help. There are dozens of free software programs available on the Web that will help you calculate how much you need to save. Check Web sites at U.S. News and World Report (www.usnews.com/usnews/|
nycu/money/moretcal.htm) and Women's Wire (www.womenswire.com/
bloomberg/retire.html). It's also a good idea to discuss your plans with a professional financial advisor to make sure you're on the right track. Start early. Begin saving now. Even if you only have four or five years until retirement, every little bit helps. Invest wisely. Make investments that will help you reach your goals. People should be aggressive in their stock choices when they are young and move toward a more conservative strategy as they move closer to retirement. Once you retire, your investments should be more conservative. Keep saving. If you continue to work after retirement, consider setting up an IRA and continue to build your assets (and lower your taxable income). Source: Patrick Donnelly, CFP, vice-president and senior financial consultant, Merrill Lynch, Pierce, Fenner & Smith Inc.
Some of Adams' better technology investments include his purchase of Cisco at $76.75, which split seven months later at $124.50. He has also done well on some technology mutual funds. Adams invested $48,000 in T. Rowe Price Science and Technology Fund in June of 1998, and invested another $50,000 into the fund a year later. That investment is currently worth $228,000. "In the last two years I doubled my total portfolio, including my IRA money," Adams says. "I made a whole lot more than when I was working." For others who want to quit working after retirement, Adams advises that they do some serious financial planning early and figure out how much they need to live on. He also suggests they get good investment advice. "You need your investments to grow if you want to stay retired," he says. Although Adams has been successful with investing his retirement savings, financial planners warn that this can be a risky way to earn money. "A lot of people have just started trading in the past few years, and they may not be prepared when the market corrects itself," says Patrick Donnelly, CFP (certified financial planner), a senior financial consultant at Merrill Lynch, Pierce, Fenner & Smith Inc., in Northampton, Mass. "There's a saying that people should keep in mind--'Don't confuse brains with a bull market.'" Donnelly says that people relatively new to the market may not be thinking of the money as investments, and could make some mistakes when the market does correct itself. "People have to remember that these are investments. They're there for the long haul," he says.