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Eight steps to take when you're 20 years from retirement

As retirement approaches, make sure you're setting yourself up for a comfortable lifestyle. These eight steps will help you prepare.

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Torin Halsey/AP/File
Retiree Jerry Hallman talks about water quality and the Colorado River Municipal Water District in Big Spring, Texas on Tuesday, March 11, 2014. Even in retirement, Hallman continued to enjoy an active lifestyle.

Even though retirement is still 20 or more years away for workers in their 40s, it鈥檚 a critical time in planning for their future needs.

For most people, the 40s mark the beginning of their prime earning years. At the same time, they may face mounting expenses at home. Paying for their children鈥檚 education becomes a major consideration, as do the financial and other responsibilities they may take on for their own aging parents.

As the prospect of retirement begins to seem more realistic 鈥斅爎ather than like some far-off event 鈥斅爄t鈥檚 crucial to determine whether you are on track with your planning. If not, you won鈥檛 have as much time to correct course as will people in their 20s and 30s. Sadly, many of your peers have not started planning at all; they aren鈥檛 yet thinking seriously about how to balance future needs with current needs.

Fortunately, when you鈥檙e 20 years from retirement, you鈥檙e still in a good position to institute changes that can make a big difference.聽The National Association of Personal Financial Advisors recently compiled聽聽for this group.

Here鈥檚 the group鈥檚聽list of the eight things that you should be addressing today if your retirement is 20 years away.

1. Fully fund an emergency account聽of three to six months of living expenses to avoid tapping into your 401(k) or home equity in the event of an emergency.

2. Boost your earning potential聽and benefits package now by contributing the maximum annual amount to your 401(k), or at least enough to receive a full employer match.

3. Contribute money to a聽, if you鈥檙e eligible, or other account to make sure you are saving in a tax-optimized manner.

4. Coordinate your insurance needs聽with your employer鈥檚 benefits package to be sure you have adequate coverage should you become disabled (long-term disability) and evaluate the level of聽聽you need.

5. Ensure you have a diversified investment portfolio聽so that you are investing for growth, and create tax diversification by allocating assets across taxable, tax-deferred and tax-free sources. Consolidate multiple聽聽and/or brokerage accounts you may have.

6. Make sure you have basic estate planning documents聽in place (i.e., a will, power of attorney, possibly a revocable trust, a living will, a health care proxy).

7. Set a benchmark 鈥溾聽for an adequate retirement fund and establish a step-by-step plan for reaching your goal.

8. Do not sacrifice your retirement聽to put your children through college. It is possible to take out loans for college but not for retirement.

Do not procrastinate about planning for your retirement. You still have time to make significant progress in your 40s. But the longer you wait, the more your odds of a successful retirement begin to diminish. If you need help getting on track, do your,听聽and consider working with a聽听补诲惫颈蝉辞谤.

This article first appeared at

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