These key strategies will help you build, protect, and preserve your nest egg.
1. Calculate Your Net Worth
Figuring out your optimal retirement plan starts with understanding what you have now … your net worth. That’s because net worth — as opposed to just your total savings — more accurately reflects how much you will have to spend in retirement.
Net worth boils down to this simple equation: What you have (your assets) minus what you owe (your debts). It’s a crucial figure to know because it provides important clues about the best ways to reach your goals, such as eliminating the debt that’s eating away at your retirement savings.
2. Maximize Your 401k (or Other Retirement Savings Accounts)
If your employer offers a workplace savings plan and you’re not using it, you’re likely leaving money on the table … especially if your employer matches your contributions. Make it a goal this year to contribute as much as possible — here’s how. The earlier and more you save, the greater effect compounding interest will have on your nest egg. It can make a big difference.
Matching Investments to Your Needs
How often do you look at your retirement accounts? If you check annually or less, you’re missing opportunities to course correct. Checking investments consistently allows you to periodically rebalance your portfolio, which ensures you have the appropriate asset allocation for your risk tolerance and time horizon.
3. Create a Saving and Spending Plan
“What if” scenario planning helps you prepare for all of the expenses that could stand ing the way of your ideal retirement. By understanding your income sources and anticipating major financial events – such as paying for college, buying a home, or covering medical expenses – you’ll be able to see any potential impact on your retirement funds and keep any surprises from derailing your dreams.Our free Retirement Planner tool will help you do just that: build, manage, and forecast your retirement plan in one place.
4. Expose Hidden Fees That Diminish Your Nest Egg
Hidden investment fees can have a dramatic impact on your retirement savings. First, every dollar you pay in fees is a retirement dollar lost. On top of that, you also lose all the money that dollar would have earned through compounding interest over time. Think it won’t add up to all that much? You could be losing hundreds of thousands of dollars from your savings over your lifetime to hidden fees.
Tax-Smart. Ways to Spend Your Savings
How you withdraw and spend your money in retirement is just as important as how you save it. Our new Smart Withdrawal tool is a client-only feature mapping out which accounts (and in what order) you should withdraw from to provide your annual retirement income. The tool bases all projections and advice on your unique situation, and it’s structured to support your budgeted spending while minimizing your taxes.
5. Consult a Financial Advisor You Can Trust
Did you know that some advisors earn commissions on trades or kickbacks for recommending specific products? This puts your interests at odds with theirs and can take a substantial toll on your nest egg.
Avoid this conflict by working with a fee-only Registered Investment Advisor (RIA) who has a fiduciary (legal) responsibility to put your interests first.
Working With a Fiduciary Benefits You
A financial advisor can help you plan for the future and stay on track. As a first step, Personal Capital’s advisory team offers a free, no-obligation portfolio review — it’s a great way to get an objective second set of eyes on your portfolio. If you’re serious about your financial goals, what do you have to lose? It’s a complementary perspective from a fiduciary who is legally obligated to put your interests first.
The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.