Recent research shows that a great deal of working Houstonians don’t know what to do with their retirement funds. Almost all of them hand over the responsibility to their employers. Additionally, only 33% of Houston workers save the same amount their employers are willing to match up. The rest is spent. 45% of all workers don’t bother saving for retirement at all. Many feel they don’t have enough to set aside for retirement. Others lack the pertinent information to start. This is where Houston area retirement account managers come in.
Houston financial planners’ advice on planning for retirement
According to Houston retirement account manager Ray Muecke of Muecke Financial, those wanting to ride out the turbulent financial markets and set themselves on a path to a secure retirement must adapt a few steps:
1. Learn to filter out the “noise”
This refers to the sensational and often-contradictory reports about the financial markets disseminated by the mainstream media. We all know many media houses thrive on sensationalism and would rather report alarming news because it sells. The smart investor learns to drown out these influences to listen instead to expert advice.
2. Determine how much risk you can tolerate
This is sometimes known as volatility or market risk. When you plan for retirement, it is important to gauge how much of the market risk you can actually stomach. This can help you determine how much to put aside in form of retirement savings. This can also be a factor of age as it relates to liquidity. The older you get, the more you appreciate being able to access liquid cash on a short notice.
3. Rebalance your portfolio
The closer your retirement approaches, the less risk to you want to assume. According to Ray Muecke, “…Even if you are strongly committed to growth investing, approaching retirement while taking on more risk than you feel comfortable with is problematic, as is approaching retirement with an inadequate cash position. Rebalancing a portfolio restores the original asset allocation, realigning it with your long-term risk tolerance and investment strategy. It may seem counterproductive to sell “winners” and buy “losers” as an effect of rebalancing, but as you do so, remember that you are also saying goodbye to some assets that may have peaked while saying hello to others that you may be buying at the right time.”
4. Patience pays
When planning for retirements, Houston financial experts recommend waiting it out. This is because on average the S&P 500 has gained 10% each year (on average) since 1926. Avoid the temptation of cashing out your retirement funds before their maturity time and be patient in order to take maximum advantage of compound interest.