The 3 Best Strategies to Create Wealth for Your Retirement

The 3 Best Strategies to Create Wealth for Your Retirement

Retirement Planning  |  Wealth Management

As wealth advisors, people often ask us for perspective on whether or not their money will last in retirement. Questions such as, “When can I retire? How successful will I be planning my retirement?”

These questions relate to  more than investing strategies. They’re strongly tied to your life strategies. If you want to live a rich life and plan for a happier, healthier retirement, you should consider everything that will impact your wellbeing.

Though current research shows some harsh realities and statistics regarding modern American retirement, planning and experiencing a comfortable retirement is within your realm. If you practice the following tips, you can put yourself on a path toward your ideal retirement.


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1) A Modern Approach to Retirement

For as long as we can remember, 65 has been the number synonymous with retirement. It’s perhaps the most anticipated birthday since 21. How long ago did we create this concept of retirement at 65? 25 years ago? 50 years ago? It’s actually a concept 126 years in the making, and you could say a lot has changed since then. Perhaps a reevaluation of our retirement expectations is long overdue.

Some of us have already given new meaning to retirement. Rather than a time without work, for many, it’s become a period of activity and philanthropy. For some, it’s even the time when they launch a second career centered around a true passion. These decisions aren’t always out of necessity. In fact, an Age Wave and Merrill Lynch retirement study found that 72% of pre-retirees – people over the age of 50 – want to continue working in retirement.

Working in the start of your “retirement” comes with financial benefits, too. It reduces the burden on your retirement portfolio to provide for the rest of your life.

The longer you can keep your portfolio untouched, the more your investments will grow:

The opportunity cost of withdrawing from your retirement savings really adds up over the years.  If you can earn an income that you can live off of even after you’ve retired, you can maximize the value of your retirement fund.

2) Align Your Risk to Your Goals and Timeline

No investment is without risk, even gold or a certificate of deposit from the world’s largest banks. The more risk you’re comfortable taking, potentially the greater your portfolio's earning potential.

Investors sometimes strangle their portfolio’s upside by taking a too conservative approach early in their lives. This isn’t a sentiment directed at 30-somethings either. An approach that’s too risk averse can potentially leave a lot of potential growth on the table. And while it’s less common, there are investors who take on too much risk as they approach retirement.

The first variable you need to define in order to align your risk to your goals is the year in which you plan to retire – and by retire, we mean when you’ll start withdrawing from your retirement savings. If you create a strategy built around retiring at 65, but start pulling cash from your account at 70, you’ll have wasted some great opportunities for growth.

Some of the most critical guidance a professional financial advisor will give you revolves around risk and how you should diversify your portfolio.

3) Tune Out the So-Called “Experts”

Financial gurus have an unfortunate influence on many investors. Forecasts and predictions about future performance and market changes may work for some – and they often make for nice entertainment – but they have no place in retirement investing.

The truth is, you don’t need future predictions to put together a retirement portfolio that generates positive returns. Sadly, the regular investor is conditioned by industry “experts” and media outlets to believe that knowing what will happen tomorrow is important in investing. But you don’t need to pick stocks, time the market or follow fund managers with a supposed track record.

None of these actions and behaviors take your own needs into account. How does timing the market align with your retirement timeline? We advocate just three essential rules when investing in a portfolio designed to accrue positive returns over the long term:

  1. Own equities
  2. Diversify globally
  3. Rebalance regularly

Plan for Retirement with Sound Strategies

The traditional retirement and investing mindset is one that we all need to rethink. Times have changed, drastically in some ways.

If you want to build a retirement savings that will help you live on your own terms, you need to think differently, change your planning mindset, and possibly tweak your investing and savings strategies.

There are, of course, more than three strategies, and we’ve already written about them. If you want to continue your education on modern wealth strategies, read our eBook, The 5 Greatest Wealth Creation Strategies.

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About Greg Hammond, CFP®, CPA

Greg Hammond is the chief executive officer of Hammond Iles Wealth Advisors, and co-founder of Planned Giving Strategies®. Greg leads a team of professional financial advisors providing customized wealth management and investment solutions for high-net-worth individuals, families, companies, and charitable organizations across the U.S.