As a financial planner, I see clients fall into two retirement-planning phases: the asset-accumulation phase, and the retired phase.
In the asset-building phase, I help clients understand the power of compound interest and saving early.
For pre-retirement and retired clients, I focus on mitigating the risks of negative returns, since many clients saw their portfolios drop in value during the last recession.
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When it comes to retirement planning, most people fall into two main phases.
The first is an asset-accumulation phase when you’re more than 15 years away from retirement and need to work hard to build your nest egg.
This requires very specific advice and planning so that you build enough wealth to meet your goals, fund your lifestyle in retirement, and not run out of money in your lifetime.
The second phase requires a different approach, because it happens once you actually retire and need to withdraw income from your investments.
Both phases of retirement planning have the common goal of a successful retirement, but the concerns for each look very different. I have two favorite pieces of advice that I almost always give my clients, depending on what phase they fall into.
Understand the power of compound interest
When saving for retirement, most people focus heavily on the annual return of their investments. While this is important, that annual return is only one of the many factors to consider when you’re in phase one of retirement planning.
Understanding the power of compound interest will give you the motivation and drive you need to hit your retirement goals.
Compound interest empowers your portfolio by applying …read more
Source:: Business Insider