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Practical Ways to Avoid Running Out Of Money in Retirement

Practical Ways to Avoid Running Out Of Money in Retirement

Retirement is on everyone’s mind. If you are not thinking about putting money in retirement, then you should. Maybe, you think you won’t need it because you can count on Social Security. Unfortunately, many retired people, who depend totally on Social Security, are struggling and barely getting by–and the government wants to cut their benefits further.

You may think you are too young to consider retirement. Even if you are young, there are many things that could happen to you before retirement that will affect your future. You may get injured and never work again, or you may have a family and not put money away.

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How can you ensure you have enough money when you retire? Let’s take a look at a few practical ways you can avoid running out of money for retirement.

Invest

Some people think that putting money away in an investment account is enough to make sure they have money for when they retire. Putting away money today will not guarantee that it will be enough to sustain you in 30 or 40 years. When planning for retirement, you must factor in inflation, or the fact that the cost of goods increases over time. Inflation can be pegged at about 4% to 5% per year. That means if you put away money in a savings account which earns 1% per year, you will not make enough money to cover inflation. Even if you saved $1 million, in 30 years, it may only be worth a fraction of that.

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Factoring for inflation, it is crucial that you invest for your retirement. If you invest in something that can yield you more than 4% or 5% a year, then you are ahead of the game. You do not need to earn that much per year, but you do need to average it over the lifetime of the investment. If you earn 10% one year and maybe 5% the next, then you can still be ahead.

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Practical Ways to Avoid Running Out Of Money in Retirement

     

    Alternate Investments

    One way to invest is through the stock market. Be advised: this is somewhat risky. You may want to look at alternatives.

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    One such alternative is in structured settlements. If you have a large amount of cash, you can pay cash for structured settlement payments. Some people get structured settlements from their insurance company or from court cases. However, many people prefer the lump sum award. This is where you come in. You can invest in such instruments and offer cash for their settlement payments. You give the settlement owner the cash they need (minus a percentage) and take over payments for them. This way, they get cash and you get a return for your investments. Paying for structured settlement payments is a great way to invest your money, and ensure you do not run out of money for retirement.

    Start Young

    When you are young, you have the greatest asset when it comes to investing–time. When you have a lot of time before retirement, you can ride the ups and downs of the market. It’s crucial to start young and invest as much as you can.

    Live Below Your Means

    Perhaps the most practical advice of all is to live below your means. When a person’s salary rises, his lifestyle often rises along with it, which inevitably requires more money. Living below your means now ensure that you will not run out of money during your retirement. One of the keys to saving a lot of money is to not increase your spending, even if you get bonuses or raises every year. If you are spending too much money, you will not be able to save for your future.

    In Summary

    There are many ways to invest in your retirement. By working now, you can relax in the future.

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    Last Updated on March 29, 2021

    Life Insurance: A Secure Way To Protect Your Future.

    Life Insurance: A Secure Way To Protect Your Future.

    Life is a journey full of ups and downs. No one can actually predict what might happen the next moment; there are times where the happiest moments do not even take a second to turn into the gravest. Planning for your future can help you face such unwelcomed but irrepressible situations with much ease. We all want to make every memorable event of our life more special and to cherish all those moments happily and worry less, you must financially plan your future. But no one has control over life and death. Who would wish to see his family suffer in his absence? Insurance hands over the financial jeopardy of life’s happenings to an insurance company.

    Importance of getting a life insurance

    No one has control over life and death. Nobody would like to see their family suffering in an absence, and that’s why many people recommend life insurance. A life insurance plan is one of the best ways to secure the future of your family, even against those financial troubles after an untimely demise. These plans are safe and credible, and you could trust them for your family’s better future.

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    On the other hand, a life insurance policy is a contract between a company (insurance provider) and policyholder in which the insurance provider ensures to pay a certain amount of money to the nominated beneficiary in case of the policyholder’s death during the term of the agreement. There are different types of insurance plans, and it is important for you to know the benefits of those plans such as a funeral, medical or some life expenses provided they are mentioned in the agreement.

    Choosing the right insurance plan

    If you’re about to select an insurance plan, you should consider some important factors:

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    • The time at which you start investing in a program and the number of family members you want to get insured. Obviously, a married man with two children has different needs compared to a single one. The number of persons who are dependent on an individual also varies from person to person.
    • The next thing you need to consider is you and your family needs. What are your child’s dream, your retirement plans, for how long would your dependents need financial support, any personal injury, etc. And do not forget those events or situations that will surely demand a huge sum of money.
    • The next thing one must consider is your current income. You should preferably choose a plan which you can afford.

    Now you must be having a pretty clear idea of how to choose the best plan for you. Further, you should also compare various plans offered by different companies and numerous sites available online that help will you to compare them.

    Differences between life insurance plans

    Here’s a short brief of some plan categories you can choose according to your needs:

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    • Term Insurance Plan – You have to pay once, and your nominee gets the paid money under your misfortune demise. It ensures a person for a fixed time. If you survive the policy period, you do not get your premiums back.
    • Whole Life Policy – This plan continues for your lifetime. Under this, the policyholder has to pay regular premiums, until their death.
    • Endowment Policy –  In case the individual dies during the tenure, the beneficiary gets the amount assured. If the person survives the policy tenure, they gets back the premiums paid with other investment returns along with several other benefits.
    • Money Back Policy – In this a portion of the money invested is returned to the investor at regular intervals. If you survive the insurance term you get the entire amount back; else the beneficiary receives the entire sum assured.
    • ULIPs – These are the life insurance plans that offer you future security plus wealth creation options.

    Many people do not opt for whole life policy and endowment policy because of the high amount of money you need to pay, while others may prefer to opt for these if they have a high life expectancy. Surely you will find the best one for you.

    So what are you waiting for? Plan for your future and live a happier and carefree life today.

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    Featured photo credit: aryehsampson.com via aryehsampson.com

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