If you’re late to the retirement savings game – or if your portfolio took a big hit – what can you do?
Experts say to stay in the markets, increase risk investments to try to gain ground, work longer before retiring and delay taking Social Security and drawing down investments.
Those are just some of the ways that financial planners are helping their clients prepare for retirement.
Planners have general advice, too, for those saving for retirement. Planners say working longer, taking on part-time work after retirement and scaling back living arrangements or plans such as big annual vacations are good places to start when rethinking the cost to fuel your golden years.
“I am optimistic, and I want people to be optimistic, too,” said Julie Kemp of Financial Planning Administrators of Wyomissing
Several factors such as longer life expectancies, a volatile investment market since 2008 and lifestyle choices have challenged many saving for retirement.
According to Kemp, retirement is a long-term process and should be viewed and planned for with that perspective in mind. Strategies should aim for a long-range plan, rather than short-term gains or losses.
“Retirement is definitely different today than it was for previous generations,” said
Edward J. Boksan, who is based in Allentown. Boksan is a financial services professional agent with New York Life Insurance Co.
For those whose portfolios took a significant hit when the economy tanked in 2008, Boksan said taking stock of what a client has now – and looking into the future – might
include delaying the last work day.
As people are living longer, many workers are reconsidering what retirement will look like, along with when they’re likely to take it.
“Many people are now looking at working until they’re 67 or 70, or longer,” Boksan said.
“What we’re often counseling clients on is how they look at investment strategies, and synergistically look at different facets of their financial lives and taxes,” said
Laurie Siebert, senior vice president of Valley National Financial Advisors, based in Bethlehem.
Working longer and being willing to risk more money in stock investments might be some ways to recap losses sustained, according to Siebert.
“But staying out is not a way to gain ground,” she said.
Even those who experienced investment losses in their retirement portfolios since 2008 may want to reconsider the stock market along with other kinds of investments which could guarantee income in later years.
It’s important to stay in the markets, even when times are tough.
According to Siebert, some might wait too long to get back into the stock market.
“Waiting too long and then buying when stocks are rising is not the best time to buy,” she said.
“Interest rates are rising in the markets, even though no one really has good understanding of why they are on the rise,” Boksan said. “Even with losses in the market, I urge clients to get back in.”
Consider investment splits carefully, especially if nearing retirement age, Boksan said.
“Years ago, a more conservative approach might have worked. Now, conservative investments barely keep pace with inflation,” he said.
According to Boksan, gone are the days of company provided pension plans.
“Most people don’t have those resources any longer, because companies can’t afford to provide them,” he said.
For some, it’s about not having enough to retire on, while for others, it’s about making sure the money won’t run out.
With many workers, putting off retirement until well into their 70s and having a more diversified tax base are other considerations.
Boksan said looking at how tax liabilities will factor into drawing on retirement income, as well as considering different life insurance annuity options, can help fund retirement costs.
For young workers, making small, consistent savings efforts now could pay off in big dividends down the road.
“I urge young workers to get into programs as soon as they are eligible to do so,” Kemp said.
“Employer contributions to 401k programs are free money. Why would anyone want to walk away from free money,” Siebert said.