Retirement is a big transition; you lose a steady source of income and rely solely on your pension and investments. A bad retirement plan can leave you almost penniless in 15-20 years or even less if you encounter health problems. However, even an excellent retirement plan can be vulnerable to economic changes or drastic unforeseen events that hit the country. Add a few safeguards to your retirement plan to ensure you get to spend the money that you saved.
Don’t Put Your Eggs in One Basket
Invest in a variety of stocks — and by variety, it means stocks in different sectors. Apple, Facebook, and Google (Alphabet) stocks can be some of the most successful, but they are all technology-related stocks. Diversify by spreading your investments into different sectors like the food industry, manufacturing, or real estate. This way, disasters that hit one particular sector (like the dotcom bubble of the early 2000s) won’t seriously affect your other stocks. Start your own business or buy a franchise. Companies give you the potential to earn big money, but they require serious dedication, a lot of knowledge, and meticulous planning. If you want that steady flow of income without the effort and risks of running a business, buy a rental property. A rental property gives you a constant source of income that can last for decades, without removing the option to sell any time in the future.
Prepare for the Worst
It doesn’t matter if you’re working in Walmart, AT&T, or in your own a multi-billion company; once Venezuela-like recession hits the country, your money and your retirement plan will be worthless. Allocate a portion of your investments into gold and international stock. If ever the US faces a disastrous recession in 10 or 20 years, investments in gold and foreign stock will somewhat insulate you from the effects. The value of gold rises when shares plummet, and an international standard sets their value. The price of gold doesn’t fluctuate or drop; it’s less of an investment and more of a safeguard. Global stocks are both safeguards and investments. As long as the stocks you choose are not closely tied to the US, they would be mostly unaffected by any economic disaster that may hit the country.
Don’t be afraid to move. Every state is different, and some are friendlier to retirees. You’ll barely make ends meet with $20,000 a year in Los Angeles or New York, but that same amount will have you living comfortably in another state. Choose states that won’t tax your pension and have reasonably low costs of living like Arizona, Texas, or Miami. If the country you’re living in suddenly passes bills and resolutions that would be detrimental to you, just pack-up and leave. That’s what haulers are for. A good retirement plan works best in the right environment, and where you are now might not be it.