After big market gains through the 1980s and 1990s, baby boomers saw their investments plummet during the great recession. Instead of thinking about working long hours to make up for losses or pulling money out of your retirement fund, start updating your financial plan for controlled spending and diversified investing in today’s low-cost stocks to rebuild your nest egg.
The key to a good financial plan is examining what you still have and altering some of your investments for your retirement fund. The stock market will always go up and down, but simple diversified investing can protect your nest egg.
Diversified investing includes stocks and bonds, but the financial plan has changed for aging boomers. While putting a smaller percentage in bonds was good advice as a younger investor, that amount should increase as you age. For example, as you turn 60, as some boomers already have, put 60 percent of investments in bonds. With an economic recovery bringing along possible inflation, consider short- to intermediate-term corporate bond funds and inflation-protected securities funds.
Expect stocks to surge and fall over the next several years. Consider low-cost index funds, commodities, inflation sensitive investments and hedge funds. Diversified investing may also include international stocks and foreign government bonds through mutual funds to protect your nest egg if the dollar takes a sharp decline.
Reducing the cost of your lifestyle plays a major role in a solid financial plan. If you can cut $100 a month in expenses, add that extra savings to your retirement fund. You can recoup your losses through good returns from diversified investing with today’s record low stock prices as they begin to rise.
If you can refinance your mortgage at today’s low rates, you can reduce your monthly payments up to $400 or more to nourish your retirement fund. Mortgages and home equity loans have tax deductible advantages, but pay off credit cards, at least more than the minimum each month. Spend a few hours a week in a part-time job or at-home business for extra cash to protect your nest egg and retire in comfort.