How Can I Retire in 10 Years?

Answer...

First and foremost, you need to take control. To get and keep you on track, you should review and implement the following checklist: 

1. Don’t dream about how nice your retirement is going to be; set real priorities. And set goals. You can’t get moving without a target to aim toward. Most of us plan our vacations better than we plan our lives.

2. Create a vision of retirement and define what that means. Do you see yourself with another career or maybe working part time?  Maybe playing golf in Florida or doing volunteer work in your local community?

3. Understand where your money is going. This doesn’t mean tracking every penny you spend. It means getting a general sense of where your money is going. Focus on saving now. Save between 10 and 20 percent of your gross income per year toward retirement. We are responsible for our future retirement today.

4. Take responsibility for your retirement and don't expect your company and Social Security to provide very much to help you. Once upon a time companies provided pensions that paid us monthly checks, but these types of plans are disappearing very fast and being replaced by contribution plans.

5. Learn about investments, including the costs and benefits of the many choices available today.  The world of investments is becoming more and more complex every day. Utilize a diversified overall investment program. Diversification does make a difference over time.  Don’t get carried away with thinking that you can time the market and select the investment that will do the best at any one time. 

6. Understand what asset allocation really means in terms of reducing risk.  Asset allocation means investing in several types of investments such as stocks, bonds, international stocks, even cash, or money markets.  Design an overall allocation to achieve your targeted return and stick to it. 

7. Take full advantage of company 401(k) plans. With company matching you can’t lose here.  If your company matches 50 percent, then you have already earned a 50 percent on your investment before you have invested it.  You can’t find a better deal anywhere. 

8. Treat your stock options as investments and not as found money.  These dollars can build tax-deferred as long as your company is doing well. When you exercise and sell the stock, reinvest in your overall investment portfolio and watch the dollars build. 

9. Don't concentrate too much money in your company's stock. You don’t want to put too many eggs in one basket.  Make sure your 401(k) does not have too much in company stock. Think long-term when establishing an investment program and orient investments toward growth stock mutual funds or exchange-traded funds.  Don’t chase the hot fund or you could get burned.   

10. Don’t get too conservative too fast in building retirement assets.  Remember you have to invest through retirement not to retirement.  Just because the actuarial forecast is a life expectancy of 85 doesn’t mean you will only live that long.  Remember that 85 is an average which means many people can expect to live well beyond that age and I know many people in their 90s today. 

11. Make use of IRAs to help build investments for retirement.  The earnings will build tax-deferred and are worthwhile even if you don’t get a tax deduction. 

12. Think in terms of replacing 100 percent of income in planning for retirement.  Even though some expenses do decrease in retirement, many other expenses such as travel and entertainment will actually increase.  Target more rather than a minimum need. 

13. Don't tap retirement funds to finance a college education for your children or paying down debt or anything else.  Your children have many years to pay off school loans if they need to but you could have a short time frame to retirement to rebuild your assets. 

14. Study and understand company benefits available and take full advantage of them to achieve long-term goals.  It is easy to miss out on opportunities when you are not aware of them. 

15. Stay involved and aware of your parent's financial situation.  Be proactive in helping your parents manage their finances so that you don't end up using your retirement funds to support them. 

Take control of your finances today and never look back!

by Diahann W. Lassus, CFP^®, CPA

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