Retirement planning never really stops. From the moment you first begin to understand the importance of taking charge of your own financial future, you’re likely to be engaged in retirement planning to some extent.
Retirement planning continues even once you reach traditional retirement age and stop working full time. You need to continue investing to make sure you have enough in your account to last throughout your retirement years, and by the same token, you need to calculate how much to withdraw each year.
You’ll certainly employ a long-term strategy, but you’ll also make important retirement decisions on a year-to-year basis as well. Successful retirement investing, for example, is a mix of long-term focus and adjusting your holdings to reflect changing market conditions and your changing financial scenario. Here are some tips for considering how you can start your 2021 retirement investment planning off with a bang.
Make Your Investment Contributions Immediately. This may not be an option for everyone, but you can start your year off right by making your annual self-directed IRA contributions immediately. For whatever reason, far too many individuals wait until the end of the calendar year (or even into the next year, prior to when they file their tax return) to make their annual contributions. This means you’re missing out on top to a full year (or more) in which those contributions could be growing. And given how your account balance compounds over time, the ultimate price for losing out on this time could be significant.
Be creative with your current budget to find ways to make all, or at least part, of your self-directed IRA contribution right away. The sooner you can kick off this year’s investing, the better off you’ll be in the long run.
Open a Self-Directed IRA. If you don’t currently have a self-directed IRA, then consider making this the year you finally open one. Self-directed IRAs provide you with the broadest possible range of investment options, which means that you’ll have the best possible chance of getting exactly the right investment to suit your portfolio diversification and profile needs.
Consolidate Your IRAs. Once you have a self-directed IRA, you can consolidate your other IRAs into that account this year. With a larger account balance, you’ll have more investment opportunities available to you, including assets that you may not otherwise be able to afford investing in, such as multi-family residential housing developments, or investments in private companies.
A big part of successful investment planning is simply taking a more active role in your financial future. This doesn’t necessarily mean trading in and out of investments more frequently. Rather, it means keeping yourself better informed of your portfolio investments and your potential investments. And it means making contributions to your self-directed IRA at the beginning of the year, rather than waiting until the end.