In their excellent book Save Your Retirement, Frank Armstrong III and Paul B Brown cover the vast ground of retirement planning issues from asset allocation to estate planning. The writing is simple and clear and they offer sound and actionable ideas to help readers prepare for retirement. I've described some of their ideas in previous articles and here are some of my other favorite ideas from the book:
- The asset allocation glide path concept that provides guidance on when to gradually shift into more conservative investments as the time grows closer to retirement.
- What you should do (or not do) when you reach seven magic retirement birthdates - 50, 55, 59 ½, 62, 65 70, and 70 ½ plus one more.
- The quick rule of thumb for how much money you will need at retirement: for every $1 of annual income you need to generate from your savings, you should have at least $25 in your capital account.
- "If your employer sponsored savings plan (401(k) or 403(b) for example) isn't so hot, perhaps your spouse's plan is better. Max that one out if you haven't already."
- "At R-10 (10 years away from retirement), it's not all about the numbers - it's about life. One key to success is to think through how you want it to unfold."
- In terms of risk, your investment portfolio has two parts: a risk-free part made up of such things as CDs, money market funds, and short-term high quality bonds funds; and a risky part made up of stocks. Money that you will need in the next few years should be in the risk-free part of your portfolio.
- "As awful as you feel, you still need to make good financial decisions going forward…You can't let a short-term result interfere with a solid long-term plan, and you can't let emotions push you into a self-defeating, knee-jerk reaction. "
For more information: Visit Mr. Armstrong's web site Sink or Swim that contains numerous personal financial calculators and helpful articles on retirement planning and to sign up for his newsletter.
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