Here’s a cliffhanger in which you don’t want to play a starring role. A study by Wells Fargo predicts more than one-third of middle-class Baby Boomers will eventually “teeter on the edge of a retirement cliff.” Statistically, retirees will be facing a vast shortfall in income, and many septuagenarians will shuffle through menial jobs in order to put food on the table.
The good news for Baby Boomers is that there is still time to turn this scenario around with a household budget. You’ve still got a decade or two to incubate that nest egg, with these four strategies:
Downsize your lifestyle. Keep track of your expenses. Few people like to budget, but the process of budgeting can be eye-opening. Often people are shocked to see the numbers behind their spending patterns. Calculate the cost of that daily latte or deluxe cable TV package, then weigh it against your retirement dreams. You might decide Starbucks can take a backseat to what you want in the future!
Don’t gamble on risky investments. Potentially high-yielding investments often pack a lot of risk. We can help you plan for retirement with a mix of investments with various risk profiles. Steer away from anyone who tries to sell you something that sounds too good to be true. Many people have lost nest eggs to neighbors, friends, or family touting the next big investment or business opportunity. If it sounds too good to be true, it probably is.
Balance your portfolio. This move is particularly important for those approaching retirement. Don’t put your financial investments on autopilot for decades. The closer you get to retirement, the less risk you’ll want to take with your money. Some people rebalance their portfolio themselves or with the help of a financial professional once a year; others use so-called target-date investments that automatically rebalance their holdings over time. We can help you decide what’s best for you.
Control your impulses. We all know by now that the investment community tends to attract adrenaline junkies. Keep the investment ship steady, and don’t pay too much attention to daily stock-market numbers. If you want the thrill of watching peaks and dips in the stock market, give yourself a small stash of money to play with.