If your 401k isn't in the most secure place right now, you're not alone. In the wake of the COVID-19 pandemic, many members of the workforce wonder whether or not they will be able to retire on their terms. Whether traveling, opening a small business, or taking some much-deserved time to relax, the next wave of retirees has big plans for the coming years but faces a more significant challenge. We believe preparation and knowledge are crucial to meet the challenge head-on.
Third Acquisitions is a real estate company that specializes in buying vacant, rural land. We intimately know the tough decisions our clients face and believe that companies and their clients should work together on a level playing field. That means making sure you have access to all the information you need to make the decisions that work best for you. With that in mind, please enjoy this list that we've compiled of 5 ways to make sure you're financially ready to retire on your terms:
It's essential to make sure your 401k invests in a variety of areas, but it's also important that you have a financial cushion. A recent article by Forbes writer Janet Novack discusses how cash bucket investing is becoming more and more popular with people on the verge of retirement. She says:
"There are multiple ways to deal with a sequence of return risk, but arguably the simplest way is with a cash bucket. For example, someone nearing or in retirement could keep three to five years' worth of money for necessary expenses (over and above what Social Security and any pensions provide) in cash or cash equivalents say, laddered CDs, or Treasury Bonds. The idea is to have enough cash that you won't panic, and can wait for the market to recover before you sell stocks to refill your cash bucket."
Retirement saving in today's market can be challenging to navigate, but this allows you to set aside a solid cash foundation that you can build on and use for future endeavors down the road.
Unfortunately, we live in an era of worry over cybersecurity and privacy of information. As a result, it's especially important to make sure that your bank protects your financial assets to the fullest possible extent. Your savings are hard-earned, and your plans for retirement are just as valuable. In an article for Next Avenue, Ron Long of Wells Fargo states:
"From scammers selling fake vaccines to crooks with bogus investing 'opportunities,' COVID-19 is yet another reminder that bad actors will stop at nothing to get their hands on your hard-earned dollars. Consider implementing protective measures with your financial institution, such as listing a trusted contact or setting up large financial-transaction alerts. You might also want to get your banks and investment firms to mail family members duplicate statements for your accounts."
As you can see, despite the understandable uncertainty that comes with keeping information online, there are many ways to ensure that information is safe and protected. Close contact with your bank about your finances can secure your protection for any post-retirement endeavors.
Social security, bond ladders, and a fixed annuity can all allow for a more consistent cash flow year after year (pensions included, though unfortunately, it's something employers value less than in the past). While these alone wouldn't be enough to fund a trip overseas or a downpayment on a second home, they would supply a more solid base to support the necessities while freeing up your 401k and other stock withdrawals for those additional expenses. William Baldwin, in an article for Forbes, reinforces this. He says:
"There's a happy middle ground between these extremes, starvation, and volatility. The key to finding it, Blanchett says, is to compartmentalize your spending. Some spending, for housing, medicine, and food, is mandatory. The rest is discretionary. Cover the first part with low-risk sources of income, he says. Cover the second with risk assets. Let's presume that, with or without help from those unappetizing annuities, you have your mandatory spending covered with stable income. You can venture the rest of your savings in something riskier, perhaps a classic 60/40 blend of stocks and bonds."
Risk assets are inherently risky, but the value that they build over time can be beneficial in funding the retirement lifestyle you want if fixed sources cover the essential spending.
This one may seem obvious, but life can quickly become hectic, and so it's understandable that often people do not get to sit down and write out all of their known expenses for the coming month. However, this is a straightforward way to make sure you have a firm understanding of your financial activity and minimize surprises. Making a monthly budget also helps prevent excessive credit spending, because you can make better judgments on how much discretionary spending you're willing to engage in each month. In an article for the U.S. News, Tom Sightlings says:
"That's where a retirement budget comes to the rescue. A budget shows how much money you take in, how you spend it, and where you can make adjustments to fill in the gaps. It also helps you prepare for the occasional nasty surprise, like a major home or car repair or unexpected medical bill. When you have a plan, you reduce your fear of the unknown and avoid a lot of stress."
One thing that is certain about retirement is that it is full of surprises. Taking the time each month to assess your budget will help make the unpleasant ones manageable, and the pleasant ones more exciting. Click here for a family monthly budget planner from Microsoft: https://templates.office.com/en-us/family-monthly-budget-planner-tm01023342.
Knowing the value of the assets you already have can make a big difference in your retirement picture - this is where Third Acquisitions can help out. Since it lacks the unique feature of a house, vacant rural land is undervalued or even ignored by realtors. However, this land usually has significant potential, and so landowners must know the true market value of their assets.
Third Acquisitions offers a complimentary 360 Land Analysis. This customized report includes a market value estimate of your land. In the report, you will see comparative data on vacant plots of land in your area that have sold in the last twelve months. The report also considers factors like location, zoning ordinances, subdivision regulations, septic systems, and overall habitability.
To be clear, receiving a 360 Land Analysis from Third Acquisitions does not mean you have to work with our company afterward. We are committed to educating the public about their land and giving them the knowledge they need to have financial independence and retire on their terms.
If you would like to request a 360 Land Analysis, we ask that you send us your contact information using the form here.
Here are the articles we cited, in case you would like to learn more about anything mentioned above.
Baldwin, William. “Live Well While The Market Tanks.” Forbes, Forbes Magazine, 9 Feb. 2018, www.forbes.com/sites/baldwin/2018/02/09/live-well-while-the-market-tanks/#7dc8539012d1
“How to Create a Retirement Budget.” U.S. News & World Report, U.S. News & World Report, money.usnews.com/money/retirement/baby-boomers/articles/how-to-create-a-retirement-budget
Novack, Janet. “8 Ways Coronavirus Will Drastically Alter Boomer Retirements.” Forbes, Forbes Magazine, 9 May 2020, www.forbes.com/sites/janetnovack/2020/03/16/8-ways-coronavirus-will-drastically-alter-boomer-retirements/#6399dec53474
“What the Coronavirus Crisis Says About the Power of Financial Planning.” Next Avenue, 17 Apr. 2020, www.nextavenue.org/coronavirus-financial-planning/
