There are many challenges to retirement planning including health crises such as pandemics. Moreover, long life expectancy is desirable, but it can also negatively impact defined benefit pensions and plans.
After retirement, many want to enjoy exotic travel vacations or simply more time with the family, which is why budgeting and setting retirement goals is very important. Money should be kept in a retirement savings account after all expenses (housing, food, health care, mortgage and child rearing) are covered each month. Matthew P Schlanger, CPA can provide additional information on the best ways to plan for retirement.
Social security payments are very important for post-working years. However, there are also many investment opportunities and options for non-earning years. Investments, usually, include: boost returns, risk-free and federally-insured stocks or bonds as well as individual retirement accounts (IRA). The latter is a tax-advantaged investing tool that depends on employment status. It can be tax-deductible and tax-deferred, but it can also change annually depending on catch-up contributions. However, it is based on life expectancy and open to hefty tax penalties. Similarly, Roth IRA entails after-tax dollars and tax deductions, whereas simple IRA depends on annual compensation and additional catch-up contributions.
There are also many other popular investment options such as stocks for growth. You can buy stocks which are exchange-traded funds belonging to publicly listed companies. You can also invest in equities. However, stocks can fall or fluctuate. For instance, during the pandemic, the stock market plunged shockingly. Therefore, you need to look into stock portfolios with growth potential or blue-chip companies with less volatility. By studying volatility profiles, you can limit your exposure to stock volatility.
Alternatively, you can invest in actively managed mutual funds (entailing fees and flexibility), index funds, exchange-traded funds (with no management expense or fees) and target date funds (which are part of employer-sponsored retirement plans). Lastly, you can also invest in diversified equity funds or look into narrow sector investments.