I hope you’ve all had a relaxing summer break. Considering the nice weather we’ve gotten as of late, you’re certainly forgiven for averting your eyes from the stock markets in favor of sun and beaches.
But it’s time to get our focus back for the last part of the year and start thinking about a few major areas of retirement planning. Not everyone’s concerns are the same, but here are a few things that might apply to you:
Despite what doomers and gloomers might say, Social Security will be around (in some form) by the time we retire. But it’s still a pretty good bet that those Social Security checks won’t cover all your needs.
Those of you with a traditional pension plan in place, well-done and congratulations, but most of us have to depend on savings and investment plans — particularly 401k and IRA accounts.
Dividend stocks such as Coca-Cola (KO) and Johnson & Johnson (JNJ) remain widely held for a reason: stability and rising dividend payouts, providing stable income for your retirement future. Look to buy the most sturdy of these on any dips — they always come back. If you’re looking for a few ideas of companies that are likely to increase their payouts over time, providing a robust yield on cost down the road, here are three to consider. Bottom line here — make sure income stocks are a big part of your retirement portfolio if they aren’t already.
Also, despite the summer long run out of bond funds, don’t abandon the asset class altogether. Despite speculation, we don’t actually know what Federal Reserve Chairman Ben Bernanke is going to do with the Fed’s easing program, or when. For now, shorten durations to lessen risk, or move to individual corporate or government bonds to avoid the pitfalls of bond funds altogether.
Debt & Spending Levels
The Census Bureau warned us earlier this year that seniors were loading up on debt, particularly mortgage debt; don’t be caught in that trap that eats away at your monthly income. This month, take a look at your bills from 2013 to figure out how much you owe, and where your money is going on a monthly basis.
Several months ago, I advocated for a simple “sources and uses” exercise to identify where the money is headed, and this is a great place to start.
Also, become an active participant in your credit score and history. You’re entitled to one free credit report each year, so if you haven’t already, get yours — and contact the individual credit agencies immediately should you see that something’s amiss.
Lastly, here’s a tip: Debt you co-sign on behalf of a friend or family member becomes your problem, too, so don’t get sucked into risking your credit profile on someone who can’t pay their own bills.
Let’s not kid ourselves: we have no real idea how Obamacare will pan out in the long run, and Medicaid and Medicare are always on someone’s target list of programs to cut or gut.
Therefore, healthcare costs are an integral part of the retirement planning process.
No matter how healthy your are today, it pays to look into long-term health insurance and elder care plans offered by groups like Aetna, UnitedHealth and Humana to protect yourself from potentially catastrophic long-term medical care costs.
Different areas of coverage to remember include prescriptions, basic checkups, specialists, hospital visits and stays, potential hospice or other long-term care.
That’s quite a mouthful, so you’ll want to keep a checklist handy. But don’t let that list put you off — while it seems overwhelming, planning now is a lot easier than wading through disaster later.
Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities.
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