As investors age, a change in strategy usually needs to shift from a higher risk for more exceptional rewards to less chance for a steady income to provide money for investors to live out their post-working years in relative comfort. An investor who is saving for retirement and investing for retirement-; will benefit from the following seven tips to grow their retirement portfolio. If investing isn’t complicated enough, the COVID-19 pandemic and current market jitters have given investors even more problems to be concerned about.
Investors who would like to make a little more sense of investing for the long haul might want to contact irainvesting.com for help. It’s never bad to educate yourself to prepare for the financial future, but everything an investor can do for themselves is beneficial in the long run. The future begins with these tips.
- Enjoy Social Security, But Wait If You Can
For an overwhelming number of retired Americans, Social Security is a significant source of income. Social Security has a considerable benefit, unlike nearly any other income source: it never goes down. If Social Security does anything, it usually goes up. A significant determinant of Social Security benefits is when they are applied for which, the later this is done, the better, since the amount received will be higher than if benefits were applied for earlier in life.
- Transfer IRA Dollars into Roth Dollars
Any investor who is currently holding IRA dollars is probably well aware that the market has taken a beating. For this reason, it would be a good idea to convert any IRA dollars into Roth dollars. Having money in IRA dollars is great from a Federal income tax perspective since the income isn’t high now, but converting your IRA into a Roth will give an investor the benefit of making tax-free withdrawals.
- Think About an Immediate Annuity
Any investor who currently has a pension is probably a happy camper right now. This is true since other investments are subject to wild fluctuations due to the market conditions, which pensions aren’t affected by. Investors who don’t have a pension would do well to consider investing in an immediate annuity, which gives investors an immediate income. It might be true that the income might be lower right now due to market conditions, but generating an immediate income could be very attractive.
- Rethink Your Asset Allocation Strategy
Especially if you are a do-it-yourself investor, it might be a prudent move to rethink your asset allocation strategy. Anyone who has their money in stocks, for example, has probably seen their values go down significantly in recent months. Money in bonds has remained in good stead, so it could be an excellent strategy to move money from bonds to stocks to boost their percentage in that area. The income might be lower at present, but when stocks rebound, an investor’s overall portfolio will play catch-up. Don’t do anything rash right now, but if an investor is having trouble sleeping at night, it might be time to increase any cash emergency fund to tide them over.
- Get More Comfortable With the Fixed Part of Income
The recent stock market losses have made living very difficult for most investors. Making matters worse is the low CD market, which is where most investors escape when the market falls. Still, true to most investors is the reliability of their old Social Security and pensions, which don’t do anything but sit there. Investors would be wise to treasure these.
- Use the RMD Waiver
Anyone who has reached the age of 70 ½ in 2019 would be wise to take the required minimum distribution (RMD) from their IRA and 401k. These withdrawals are ordinarily taxable, but the CARE act allows retirees to make a one-year reprieve, giving IRAs time to recover. Taking the RMD now locks in those losses, so any investor who can afford to wait should do so, but it might give an IRA some recovery time.
- Pay Off Debts
It’s been said so many times, but it bears repeating: debt kills. It doesn’t matter how it’s looked at, and it doesn’t matter your age, debt cripples anyone who carries it. Paying off debt can be one of the best investments anyone can make. It also provides, as they say, a very soft pillow. Debt-free living is one of the greatest things that any investor can have. It’s a gift you give yourself.
Another benefit of debt-free living is that it’s a sure thing. Once that status has been achieved, you can keep it. Another advantage of living this way is that although other investments can be costly when they lose money, “losing” debt pays since without it, investors “earn” the 15 percent that credit cards charge on any balances they carry. The same is true of the interest that is paid on mortgages and other loans. When they aren’t there, they don’t need to be paid.
It’s as simple as that. This does not mean that the money saved should be squandered. Instead, it should be saved as part of an emergency fund, which makes for another good investment if it is kept in an interest-bearing savings account. Watching high-interest rates dwindle is kind of fun too. Aging isn’t something that most people can do much about, but the circumstances that older investors live with day to day are precisely those of our own making. Fortunately, although there aren’t many things we can change as we age, our approach to the way we live can change and for the better.
Even if an investor’s life hasn’t been a bowl of cherries, it’s still possible to change a lot of circumstances that might make up the way they live now. All it often takes is a sit-down with a reliable, knowledgeable, and experienced investment advisor to get a whole financial life turned around. Careless financial living can’t be reversed overnight, but smart living can begin almost that quickly.