Investment Risks For Early Retirees

A much bigger cushion of liquid assets or cash may be necessary for you to live a comfortable retirement, which you aren't likely to accumulate if you've put your money into "safe" investments that give you tiny returns. As for savings that aren't part of that cushion, you should consider keeping it in a well-diversified stock-and-bond fund portfolio. If you're a senior who's just entered retirement, you could put half of your investments into stocks and the other half in bonds.

As the years pass, conventional investment wisdom states that you slowly draw back on stocks until they reach around a fourth or a fifth of your entire investment portfolio, ideally once you've gone into your 70s - this is when you should cut back your investment risk. This conservative mix gives you better security for the short term, although it does have less potential for growth to help alleviate the effects of inflation. You can also use an online calculator for retirement income to come up with the percentages and see how various stock, bond, and cash mixes affect the stability of your nest egg.

The stability of your retirement funds also depends on where you've placed your retirement savings. You can opt to leave some money in your 401K so you can qualify for exemption to the early withdrawal penalty. Keeping some money in this retirement account will allow you to withdraw and only pay income taxes on the taxable part of the amount.

There are also external considerations you'll need to take into account which aren't in the realm of investments per se, such as insurance policies. If you've retired before normal retirement age, you won't be eligible for Medicare until then. You may need a good health insurance policy to soften the blow to your finances if any medical problems pop up.

About the Author:
Puritan Financial Group has years of experience in dealing important financial decisions. Puritan Financial Group will listen to you and your loved ones and craft a custom financial solution that supports your life goals.

Article Originally Published On: http://www.articlesnatch.com

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