Take Control Of Your Financial Future

The model life is divided into three phases: 1) being supported prior to being independent, 2) supporting yourself during your earning years and creating a surplus 3) living off of the surplus in retirement. It is essential to have enough of a surplus to support your retirement. According to the Social Security Administration, at the full retirement age of 65, men have a life expectancy over 19.3 years and women have a life expectancy over 21.6 years (1). Half the people will live even longer than the average. Currently about 25% of people aged 65 have a life expectancy of 25 years and 10% have a life expectancy of 30 years. Additionally, these life expectancy numbers are only increasing (2). It is great to have a long life, but it is especially important during our earning years to create enough of a surplus to support a long retirement. No one wants to live their final years in poverty. In order to ensure you can support yourself, you need to take control of your financial future.

Take control by having confidence the investments you have will provide the income you need during retirement. Expected portfolio return is important, but having an expected return that meets your target still only leaves you with a 50% probability of meeting that target when factoring in portfolio volatility, or risk. Understanding your investment's expected return and volatility gives you the confidence you need by defining both the probability of loss and probability of meeting your goals.

Depending upon your attitudes toward risk and where you are on your path towards meeting your goals, you can choose an investment return and risk profile that's right for you.

1) https://www.ssa.gov/planners/lifeexpectancy.html

2) https://www.cdc.gov/nchs/data/hus/2011/022.pdf

 

Disclosure:

The information presented here is the opinion of the author and may quickly become outdated and is subject to change without notice. All material presented in this article are compiled from sources believed to be reliable, however accuracy cannot be guaranteed. No person should make an investment decision in reliance on the information presented here.

The information presented here is distributed for education purposes only and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or participate in any particular trading strategy.

Performance data showing past performance results is no guarantee of future returns.

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