By Henry Clark
Knowing if you have saved enough is just part of retirement
security. The other part involves creating an investment
that will create income without touching your savings.
If youíre past 40 or in your 50s, things are a little more
difficult. Itís difficult to predict the amount of income that
youíll need during retirement. The needs and interest rates
bound to vary during that period.
In an investment plan, the traditional advice of putting your
savings in dividend-paying stocks and corporate bonds canít be
relied on anymore. A portfolio like that tends to hurt over
time and risk using your savings too soon.
Have enough savings.
To determine if you have saved enough, there are web tools
available. Make sure that you understand the assumptions in
tool. You may also hire financial planners to do the numbers
you instead. Look for one that uses the latest income-planning
tools. Do not make unrealistic assumptions on the returns of
the savings and the investment incomes. Worst, do not make bad
assumptions on your spending.
Be prepared for deep and long recessions. Assume that youíll
spend at least as much as you do now.
Create a portfolio for both growth and income.
As soon as you have enough saved, you need to set up a system
that allows you to put your money into stocks for the
long-term, while putting away enough for fixed income.
Many financial planners advise you to place your retirement
money into three portfolios.
1. The first portfolio is for expected expenses next year.
2. The second portfolio is for fixed income investment whose
income goes to the first one
3. The third portfolio is for stocks that will grow and go
the first two
A constant flow of income can be generated when the
fixed-income portfolio is diversified into investments with
varying maturity. If youíre thinking of how much money to put
in, carefully evaluate your risk tolerance and needs. This
helps you determine how much to save and how much cash should
This is a critical decision, because it can make or break your
Try to get the most from your fixed investments. The classic
approach is to diversify your fixed-income portfolio. Treasury
bills and investment-grade Corp-bonds of different maturities
are the most commonly used vehicles.
Here are some alternatives:
1. Treasury bills
2. Corporate bonds
3. Real-Estate investment trusts
4. Convertible bonds
5. Municipal bonds
About The Author: Henry Clark can show you how to make the
of your retirement years. Visit his website and learn more