There's some good news and some bad news. The good news is that you're probably going to live longer that you expect. The bad news is that you're probably going to live longer that you expect -- and you're going to have to pay for it.
Here's some advice from the Motley Fool on how to deal with this issue:
As a rough-cut estimate, bear in mind that Robert has done his homework and recommended 4% as a safe draw-down rate for a properly diversified portfolio. If you expect your annual post-retirement expenses to be, say, $50,000, that means you'll need a portfolio in excess of $1 million to make it through 20 years of the leisurely life -- and that's not accounting for the impact of inflation on your purchasing power.
The Fool has loads of sound advice on how to put your money to work, of course. For starters, you could jump aboard index funds, which are no-brainer, low-cost vehicles that give you exposure to growth stocks as well as more buttoned-down stalwarts.
It's best if you assume: 1) you're going to be retired for longer than you think and 2) retirement is going to be more expensive than you think. If you think this way and act accordingly (in how you save, spend, etc.), your golden retirement will likely be golden after all.
As far as investing for retirement goes, you know I'm a big fan of index fund. See these links for my thoughts on why they make great investments:
- Getting Rich is Simpler than You Think
- How Average Joes Can Retire Rich
- Fund Indexers, Take (Another) Bow
- Where the Pros Stash Their Own Dough
- The Case for Indexing
- Investment Advice from Someone Who Manages Billions
In addition, I've written a lot on how to save for retirement. These posts will provide more information on this important subject:
- Income that Lasts as Long as You Need It
- Managing Your IRA for Maximum Gain
- A No-Brainer Way to Save for Retirement
- 3 Rules for a Happy Retirement
Free Money Finance recommends Emigrant Direct.
Comments