We have always heard the proverb, โSave for a rainy dayโ ever since we were kids. It might have been difficult to grasp the usefulness of this quote as children, but it might be clear now that we are adults. Yes, we now know the importance of savings and making a retirement plan, but many do not truly know where to start.
According to a 2022 study, 55% of American workers feel behind on their retirement plans. Rather than simply aspire to retire well, why not map out a retirement strategy that allows you to live out the rest of your days in ease and comfort? This article explores key strategies to help you build your strategy and also points out key issues you need to address while doing so.
How The Poker Strategy Can Be Applied To The Retirement Savings Plan
Poker is a beautiful game with many life lessons for players. And what makes it beautiful is the strategies and tactics players must develop to play the winning hand. Continue to play a tight, aggressive game, and you can take on poker players who are better than you.
One good way to draw up your retirement plan is to compare it to a poker strategy and important tips. You might be wondering how we made such a huge leap from retirement plans to a game of poker, but be rest assured that your poker table skills will be handy for your retirement savings strategy. So hereโs a poker playerโs guide to retirement planning.
First is learning risk management. There will be bad times in a poker game, and the smartest players can keep playing if they have properly managed their bankroll. The bankroll is a sort of retirement fund and determines how long a player can stay in the game.
When players win their games, they must set aside a certain amount (an amount they can afford to lose), so when luck is not exactly on our playerโs side, they can still pay. In the same way, sacrifices must be made to ensure that there is a certain amount you can always tuck away into your safety net every month.
Second, strategic poker players study the table they are at to decide how they play. They look for the fish at their table, identify the sharks, and try to work out a plan that reduces the number of sharks and exploits the fish.
In the same way, when investing as part of your retirement plan, you might want to take advantage of opportunities created by bad investors and identify conditions where sharp investors cannot act.
Lastly, just like poker players wouldnโt exhaust all their stakes in one hand, you shouldnโt also put all your money in one basket. It is interesting how poker game strategies line with the characteristics retirees need to develop for income security. The same schemes that pay off at the poker table can be used to secure even higher stakes: a better financial future.
Delay Your Social Security
There is a bit of a dilemma surrounding social security. You wonder if you should cash it in early and survive on lower payments or delay your benefit and enjoy a larger income stream in your later years. If you are a US citizen, you should hold out on accessing your benefit.
According to 2022 research, American workers aged 45 to 62 should wait until their late sixties, preferably early seventies, before claiming their social security. The full retirement age is 67. Those who collect before 67 get their benefits reduced by 30% for accessing before the Normal Retirement Age(NRA). On the other hand, your benefit increases by 8% for every year you postpone accessing your benefits. You can invest in other retirement income sources to ensure you don’t access your benefits before age 67.
Plan for Inflation
Inflations are one of the biggest setbacks to the retirement plans. You draw up a nice layout, budget your annual living expenses, and then increase the price of goods and services over time to make a mess of your master plans. Those on social security may feel the effects of inflation less than those on pension payments because social security benefits are reviewed based on the Consumer Price Index.
You can protect yourself from this vulnerability by employing several tactics, from increasing your income source to securing health insurance coverage. By consciously trying to account for inflation in your retirement plans, you have one step toward financial freedom in your later years.
Get Professional Help
Rather than stress and worry about how behind you are on your retirement plans, you can just hire professional advisors to point you in the right direction. They can give you a detailed assessment of your assets and debts and guide your retirement plan on the right course.
While getting professional, it certainly does not hurt to know all the basics about retirement plans, social security benefits, and tax management during retirement.
The Importance of Savings in Our Days
Having some amount of money saved has always been a brilliant idea in times of uncertainty, which usually may come after retirement. It makes you feel more comfortable and stress less because of financial issues. With this being said, it is crucial to note that the role of savings is higher nowadays than ever before, and there are some considerations to take into account.
We are living in dramatic times, when life is changing rapidly, with the emergence of new technologies. On the one hand, it is perfect since the dynamics of life remain on a high level, but on the other hand, it brings unexpected consequences which become a reason for anxiety, especially for those who are not well-prepared in terms of financial and social aspects.
When you donโt have a work and stable monthly income, you are heavily dependent on your savings, which change their value over time, because of continuous inflation trends. What is considered enough today, may be seen as a very small amount a few decades later, so keep this in mind when making calculations for your savings account. If you are prepared well today, you will get stressed less tomorrow and in times of uncertainty.
Conclusion
It’s never too late to start working on your retirement plan. When you build one, stay informed and consult with professionals, as plans may need updating in light of the continuously changing economic climate. Good luck to you on your retirement plan journey!