As mentioned in the first installment of this Retirement Planning series of guidelines last week, the base proposition to honestly address to yourself is: How do I prepare myself for living the years between not receiving a consistent periodic income (retirement) and my life expectancy + .20% years? I said I would share some simple, but important, guidelines that will help you start and maintain a strategic plan towards Retirement.
# 3: Asset ALLOCATION: As opposed to #2 posted February 5th, regarding the "LOCATION" of your assets/investments, your Asset Allocation Strategy deals specifically with the investments made in your accounts (Locations) that are earmarked for retirement. In other words, It’s the mix of stocks, bonds, cash, etc. inside of those accounts. This mix of investments is an important determinant of how your hard-earned savings will grow over time. However, the “RIGHT” asset allocation depends on a lot of factors –time horizon, non-retirement assets like pension or social security, and your tolerance for risk. . . Just to name some of the major factors. It’s important to educate yourself on these factors, even if it’s to honestly answer these questions to yourself. You can get a great head start by going through the iAllocate.me process (Yes, a shameless plug here) to better understand the inputs to these factors and how they can directly impact your “RIGHT” asset allocation strategy.