Financial Planning, Retirement Issues


Retirement portfolio to match your expenses

Retirement portfolioI have heard many seniors talk about how they are living on a fixed income. Inflation is increasing and making their income not go as far as it once did. They worry about whether they will have enough money to do some of the things they want to do as they get older on the same level of income. When many of these people complain about being on a fixed income they are actually receiving a small increase every year on their pensions which usually have a small inflation increase every year.

Most feel that these small increases are clearly not enough and worry that inflation will really overtake them. Some are used to salary increases when they were working that increased their salaries faster than the inflation rate. Those types of salary increases are long gone but that is no consolation to the many seniors who live on a fixed income even if there is a small increase every year. Bottom line, we all need to evaluate all of our expenses and reduce where we can to counter the effects of inflation.

Increase Your Income

One way to gain increases in your income most years is to invest in dividend stocks that increase their dividend every year and also have a growth component in their stock value. Although there are no guarantees, these stocks pay a dividend so you do have income from your investments and if your invest in the right companies, you may get an increase every year. In fact some companies have a record of increasing their dividends for many years. This is an enviable record and can be an important component of a retirement portfolio.

With dividends increasing every year your income is increasing and if the stock does well the value of the stock will also increase. When it comes time to sell your investment to be used as part of your retirement, you will be selling a stock that has also increased in value and will help deal with the increasing inflation that we all know is there and will continue for many years.

Retirement portfolio – Avoid Cashing in Your Principal

Consumers who are retired and living off of pensions may find that they can live on the pension income they receive and also the income they generate from their investments without having to touch their investment principal. If this is the case, they are in an excellent situation to live into their late years without having to worry about having enough money to live on. In fact your investment adviser can calculate the income rates and the rate seniors may want to withdraw their money to ensure they can enjoy it in this situation.

Many people are not in this position. This is one of the reasons we urge people to save for their retirement regardless of whether they have a pension or not. It is an additional safety margin in case your pension is not as large as expected or inflation is much higher than anticipated.

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