Are You in The Retirement Red Zone?
Are You in The Retirement Red Zone?
In football, the “Red Zone” is described as the part of the field between the 20 yard line and the end zone. This is where the ‘rubber meets the road’ according to all of the sportscasters. Whether you are on offense or on defense, you are heavily measured by your performance in the Red Zone.
And so it is also true in your retirement financial life. You hopefully start saving for retirement from the time you start working and save, little by little, toward that day in the future that you will be able to sit back, relax and enjoy the fruits of your labors. All of that remains true today, but only if you begin saving while you are young. The fact is, though, that most people today are so caught up with buying cars, houses and electronic toys that they can barely make all of their credit card obligations, much less put anything aside for retirement.
So, hopefully, at some point you start to look forward and start up an IRA or contribute to a 401(k) or stock plan at work. At last, you are finally saving something toward retirement! That is really great to save while you have sufficient time ahead of you to allow your investments to compound and grow.
When you enter the Retirement Red Zone, that period starting 5 years before your retirement date and lasting for 5 years after you ‘pull the plug’, your whole mindset must change dramatically. You see, once you are within 5 years of retirement, you no longer have the advantage of ample time. Let me explain.
If you make an investment mistake or the market takes a huge downward swing (i.e., 1929, 1987, 2001, etc) while you are in your 30s, 40s or early 50s, you still have time in your investment horizon for your investments to rebound and recover. Once you are within 5 years of retirement, time is not sufficient to allow for recovery from a blow to your investments. This is why most financial planners recommend switching your investment allocation from riskier and higher producing investments over to more conservative things such as bonds.
Even after you retire, you must have the priority of asset protection, at least for the first 5 years. During this period, any significant reduction of your investment assets will have huge consequences on the length of time in the future that your investment income will be able to provide for your lifestyle.
Especially while you are in the Red Zone, it is very helpful if you have an extra source of cash flow to keep you from having to withdraw from your investment nest egg. Just an extra $1,000 to $2,000 per month during this period can make a remarkable difference in your lifestyle and financial security.
If you look around enough, especially on the internet, you will find many, many opportunities that can provide this level of cash flow to supplement your retirement income. You will need to beware of the “Get Rick Quick” schemes, though, and remember the old saying “If it looks too good to be true, it probably is!” There are many ways that you can use the knowledge and experience that you possess to earn some extra cash.
Think about the experience that you bring to the market. In your life, you have learned techniques and skills about several things. Among these, which is your favorite? What is it that you deeply care about? What are your passions? If you really think about it, I will bet there are ways that you can leverage your experience and knowledge into a source of funds to supplement your retirement income all the while enjoying what you are doing.
Resources: Don Seibert is a retired business executive who, as an Expert Author, writes timely articles on many issues concerning sources of retirement income. Having retired three times, he now is the host of http://www.RetireToEasyStreet.com
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