You may have a time horizon of 5 to 15 years before you intend to retire. It is wise to do the following to gain an updated reality check to see if you are on target.
1. Assess your current savings.
After looking over your portfolio holdings, calculate if you will be close to your retirement savings goal set for your retirement start-date. If it seems your savings are not sufficient to retire on, and you have 10 or more years, you may still be able to increase your accumulation to get back on target.
2. Do an income analysis.
Once you know how much you have to have saved in your retirement portfolio, translate that capital into a provisional income flow over your retirement years. You can have a financial advisor run the numbers or use MS Money or Quicken software to project withdrawals over a certain number of years.
3. Renegotiate your retirement date.
You may be able to retire earlier than expected. If you will not have enough money saved, possibly extend your retirement dates, planning to work a bit longer, or with another firm. If you have given your notice as to your retirement date, talk to your personnel department or boss to see if you could extend your stay one or more years. Or reduce your annual income that you will take out of your retirement savings. You may prefer to work a little longer compared to reducing your lifestyle.
4. Monitor your investment portfolio performance annually.
Begin getting seriously involved with your financial advisor, investing in the more stable types of investments preparatory for creating income. Slowly place more of your holdings in income-generating investments, while considering keeping some money invested in more stable long-term equities such as dividend-paying large-cap stock mutual funds.
