I’m 62, single, and never had a retirement account. I have $100,000 to invest, but is it too late?
I am a 62 year old single male and have never had a retirement account. I own both my home and a rental property that are paid off and I have no other debts. I have $100,000 in savings that I would like to invest for my retirement. In my current job, I save $10,000 a month, so I hope to be able to significantly increase my retirement funds, but I’m an entrepreneur working overseas in an unstable industry, so there’s no guarantee of how much I can add the following months or years.
After much research, I selected a Schwab Robo Advisor account, but have yet to have the required meeting with their financial planner or commit the funds. Given my age, I expect a maximum of 10 years before I need to access these funds, but that’s not guaranteed either and I may need to take the money out sooner . I’m nervous about the markets and our world in general and my own relatively short-term (10-year) outlook in which to grow my nest egg. Are there better options such as high yield savings accounts, CDs or specific treasuries that I should consider instead?
Too small. Too late.
See: I will soon be 65, I have $320,000 in retirement savings and a paid off house, but I have $46,000 in debt. Should I withdraw more money from my investments?
I’ll start with some good news – it’s not too late.
Many Americans don’t have a retirement account, so you’re definitely not alone. It’s great that you’re looking to change that now, and you still have time.
Honestly, you’ll have to be a little aggressive with your current cash flow. The ability to save $10,000 per month is one of the wishes of many Americans, so take advantage of this amazing opportunity. You’ve paid for your house and a rental property, and without debt, you should be able to store much of that income in investment and savings accounts.
“From a savings perspective alone, he has a very good chance of building a retirement that’s right for him,” said Byrke Sestok, Certified Financial Planner and President of Rightirely Wealth Partners.
I will suggest – and this has not so much to do with retirement as good general personal finance practice – that you set up an emergency savings account with six months of living expenses if you don’t have one. already one. The unexpected is just that – unexpected – and it’s especially true if you work in a “fickle” industry, as you put it.
Beyond that, let’s look at some things you can do right now to boost your retirement security.
A robo-advisor is a great first step to investing, and if you’ve figured out all your other finances, you might not be interested in working with an advisor. A human financial planner is able to discuss investment choices, help you control your emotions in the face of stock market volatility, and remind you of considerations you may not have thought of yourself. But if you just want to get started right away and not waste any more time, an online platform like a robo-advisor does the trick. You just have to be very diligent.
If you decide to work with a financial advisor, review the professional – check their certifications and ask about their fees, which can be hourly or as a percentage of your assets. Also, make sure they are working in your best interests, so ask them if they meet the fiduciary standard. Here are some other questions you can ask.
When creating an account, regardless of the service you choose, be sure to think carefully and consider your timeframe, your risk tolerance (i.e. the level of risk you are willing to take with your investments) and your risk capacity. (that’s how much you risk need to take to achieve certain investment objectives. Many services offer you a suggested portfolio, and it could end up being more heavily weighted in conservative or aggressive investment choices depending on the information you enter.
A quick note on your timeline. You mentioned that you expect a maximum of 10 years before operating these assets, but as you said, it’s not guaranteed. Keep this in mind when doing your asset allocation. You might want to work with a human advisor, or talk to an investment firm, about setting up “buckets” instead of a giant wallet. This way you can have part of your investments allocated aggressively – that would be the long term bucket – and part of your nest egg allocated more conservatively – that bucket would be if you need the money sooner .
Lily: Does the bucket policy exceed the 4% rule?
This is where that emergency savings account, which could be your third bucket, also plays an important role. When the stock market is acting up, it’s best to leave investments alone so that losses have time to rebound. If you have money, you let those assets grow without potentially damaging future returns.
Also see: I retired at 50, went back to work at 53, then a medical problem left me jobless: “There is no certain amount of money”
There is no magic number for what a person needs in retirement, so you may feel confused about choosing a goal when viewing the data on a robo-advisor site. Instead, you can choose to enter what you plan to contribute each month, and it will generate a few possible results based on that information and possible rates of return.
If you’re trying to set a goal, consider all possible financial factors. Think about the income you will have, like this wallet, a pension, social security benefits, side work, etc. Also think about all the expenses you could imagine…maintenance of your home or rental, taxes, health care, any important goals like vacations or a boat, family obligations or charitable donations you would like to leave behind and beyond. Don’t forget long-term care planning, which is completely separate from your day-to-day medical expenses and can be very expensive. “The simple fact is that as we get older we have more medical bills and those are things that cannot be ignored,” Sestok said.
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You are also living abroad now – you will likely need to research what your lifestyle will be like if you plan to return to the United States or continue to live abroad. If you can think of it, list it and plan it. Here is a calculator to help you prepare for this task.
I will end with this. I know you mentioned that you were worried about putting your nest egg in the markets given the current economic climate, and that’s totally valid. Investing can be scary. You’d likely see a higher return in a decade with an investment account than a savings account, Sestok said, but you also need to be able to sleep at night, so you might want to talk to a professional. to balance your risk. tolerance with your risk capacity when building a portfolio. The last thing you want is for your feelings to interfere with your retirement security.
“The number one thing with investing is not that your emotions play a role,” Sestok said. “That’s also the number one challenge.”
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