Retirement Planning: Money Strategies For The Long-Term

One of the most challenging tasks in life is the process of retirement planning.  There are many factors and variables which can lead to disaster if family savings are not properly protected.  This means a little time and research can go a long way in helping us to secure our financial assets.

For retirement planning, there are a few broad rules that must be understood – and these are all concepts that can be used to grow and cultivate wealth-building strategies over time.  Here, we will look at a few of the most important strategies money savers can use to build wealth over time.

Save Early, Save A Lot

Statistics show that starting early can make a big difference when we are building wealth over time.  If we start at age 35, and invest $550 a month it becomes possible to have a very comfortable nest egg by the time we reach retirement. 

An average salary of $100,000 per year with an 401(k) equal to $200,000 can offer attractive growth prospects by the time a 35 year-old reaches the age of 65.  Assuming a 7% annual rate of return, a $550 monthly deposit will grow to $2 million by the time retirement years are reached. This is an excellent example of the ability we have to put our money to work for us – and to achieve stable wealth over the long-term.

For some, it is not easy to budget $550 a month for savings/investments.  Of course, any savings be better than nothing at all – and this should not discourage investors from saving their money for retirement.  There are excellent budget tracking tools that will allow us to allocate more of our paycheck using strategies that maximize returns.  These tools can make it easier to save money and meet financial goals each month.

The Power of Dividend Stocks

Some financial experts would argue that a 7% annual return on our investments is conservative – and that more can actually be achieved when directing more of our savings to the stock market.  On average, the S&P 500 earns about 12% return. This is why financial experts typically recommend that portions of a retirement portfolio include both types retirement investing approach.

One of the most powerful investment assets for retirement investing is the dividend stock, which pays a portion its available cash flow back to investors at regular intervals.  This is usually done on a quarterly basis, and the payout differs depending on the stock that is purchased. Common dividend stocks include companies like General Electric (NYSE:GE), Bank of America (NYSE:BAC), and AT&T (NYSE:T).  

Of course, there are many different dividend stocks available to investors, and the long-term wealth-building opportunities associated with those stocks is going to depend on a number of other market factors.  A stock’s dividend yield will always be important in determining the power of any dividend investment – and this is calculated by dividing the total dividend paid each year by its price per share.  

The higher the yield, the better the growth opportunity for a retirement investment portfolio – and this is why dividend stocks represent one of the best opportunities for long-term wealth planning.

Having a Clear Financial Plan

When implementing wealth-building strategies, the first part of the process is to have a clear financial plan.  Financial goals can differ greatly from person-to-person or from family-to-family but in the chart below, we can see some of the values that are held by most people:

Here, we can see that proper prioritization is critical in terms of the ways retirement savings can work through our daily lives.  Some of these goals are essential, while others might not be complete requirements. But, as prudent consumers and wealth builders, it is critical to have a clearly focused approach so that these financial goals can be easier to accomplish.