|By Nanci, Hellmich, USA TODAY|
With a little effort, retirement could be a lot better for a large number of people, says certified financial planner
What some retirees need to do is rethink their approach and create a new blueprint, he says. Freedman offers these five ways retirees can create a richer retirement:
Don't rely on your parents' model of retirement
Years ago, many people got a pension or
Today, it's different. Pensions for private-sector employees are essentially gone, and
"Even with interest rates at dismal levels, some retirees are still looking to interest-bearing investments as a primary source of income. It doesn't work that way any longer. You need to explore dividend-paying investments, and/or investments that have a growth component as well," he says.
Consider a total-return approach to supplementing your income, Freedman says. "Draw income from dividends, interest and even some growth from your investments. Take a close look at your total financial picture and then work to create an income stream."
Evaluate your net worth
A successful retirement starts by assessing everything you own and subtracting everything you owe to come up with your net worth, he says.
In retirement, many different assets — home, investments, annuities, IRAs, insurance policies and money in the bank — can provide sources for income. And don't forget, with interest rates so low, carrying some debt on a home may be a smart use of money, he says.
Take a hard look at your investments
Having personal investments in cash or low-yielding investments can hurt your ability to supplement your spending needs as the years go on, he says.
Freedman says that for the average investor, individual stocks are too volatile, so he recommends considering mutual funds. These professionally managed pools of investments provide you diversification, liquidity and participation in the future of both domestic and world economic growth, he says.
"Yes, the accounts will fluctuate, but not nearly as much as individual stock ownership. And by owning a collection of stocks and/or bonds in a mutual fund, you spread out your risk and move more smoothly through volatile market cycles."
Don't sacrifice your own quality of life to leave an inheritance to the next generation
If all you do is live off the interest from your investments, the kids will receive a lot of money; not to mention the value of your house and insurance, he says. So find a healthy balance between enjoying your retirement and providing a legacy to the next generation.
If you have the extra money and want to do something for your family, here's an idea: Consider including your children and grandchildren as participants of your good fortune now. Plan a family cruise, a weekend in the mountains or a trip to visit your family's roots. It's a great way to reconnect with those you love and spend money in a manner that warms your heart.
Beware of taking
Unfortunately, too many retirees begin to take
Freedman's advice: If possible, wait until at least 66 or older to take the
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