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"Earn fast, retire young." The concept sounds great, but it's the follow-through that churns your stomach into knots.
If you're risk-averse, the modern investment world probably has made you feel like the parade has passed you by. But believe it or not, you don't have to bet the farm. Betting wisely through investing is just one piece of the strategy. Here are 15 ways to meet your retirement goals using strategies that won't make you nauseous.
- Start saving now. OK, so putting all your money into 10 growth-oriented stocks is a risk. So go for index-based mutual funds. The sooner you start, the more time you have to build up your retirement reserves.
- Make retirement your top priority. Your retirement is more important than funding your children's education. There are many loans and work programs they can tap, but you can't take out a loan for retirement. In fact, you may end up having to turn to your own children for support -- something you probably don't relish doing.
- Add to your life expectancy. Figure out your life expectancy using MSN Money's Life Expectancy Calculator and add at least five years for planning purposes. If your family has a history of longevity beyond even that age, adjust accordingly.
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- Assume your expenses will be at least 100% of your current expenses. The rule of thumb is 80%, but that rule of thumb was made up before we started expecting to travel, go back to school and basically enjoy life with a higher standard of living than our parents. And although some expenses, such as work clothes, lunches out every day and retirement plan contributions do go away, other expenses -- mainly higher medical costs and custodial care/nursing home expenses -- eventually will raise their ugly heads.
- Reduce your estimated Social Security income. You can request your Social Security Statement online or wait for an annual statement from the Social Security Administration, delivered about three months before your birthday. When planning, count on 80% of your estimated Social Security retirement income, and don't expect it to keep up with inflation.
- Work part-time in retirement. Starting at age 55 (or about five years before you plan to retire), develop a sideline business or new skill so that you can continue to work part-time after you retire from your regular job. This gives you the flexibility to earn additional money if you need it. See "Retirement? For many, that's no option."
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- Forget about that vacation home. Don't use the "it's a good investment" rationale. It's only a good investment if you plan to sell it at some point. All the money you spend buying it and maintaining it is money that you have diverted from your own retirement (and other goals).
Continued: Don't take early retirement
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