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Sunday, November 15, 2009

Maximizing Your Retirement Income & Lifestyle

Millions of baby-boomers are now reaching retirement age. With the recent meltdown in the markets, many may be wondering what they can do to insure the lifestyle and income they once were planning for. In this article, I give you my favorite retirement income strategies.

First off, if you are still working, you should MAX out any employer-matched plans you may have at work. The closer you are to retirement, the more you should be contributing to these plans. If the markets scare you, then asked about any guaranteed interest option your employer may offer, and put as much as you possibly can in the plan.

Think about it, if your employer matches your contributions 50% or even 25%, where else can you get that kind of instant return on your money? NOWHERE! So, if you are not maxing that thing out (and most folks are not) you really need to start. Even if it means you have to cut back on your lifestyle right now.

Secondly, if you don't have an employer matched fund at work, what other options do they have? If you work for a school system you should look in the benefits of a 403(b) plan.

If you are self-employed, and have not saved anything for retirement, you may think seriously about working a few years for the school system and maxing out the plan.

My favorite retirement vehicle by far is the Roth. Either the Roth IRA and/or Roth 401k. These could well be the best wealth generating tools available for the average person today! In my opinion, many tax advisors, financial planners, and CPAs have given their clients bad advice in this area. I think every man, woman, and child in the US should have one of these accounts!

With a Roth, you can't take a full tax deduction in the year you contribute to it, as you can with a traditional plan. BUT, when you pull the money out, it is all tax-free with a Roth! So what would you rather have, a tax-deduction now, or tax-free income for life?

In a truly self-directed plan (again, I prefer the Roth if you qualify) you can invest money in the market, in real estate, in a business, and many other areas. With your plan at work, you normally have limited choices. Now you may not have a desire to be the next Donald Trumph, but you may get motivated to do a real estate deal or two if it could quickly beef up your retirement account. Remember, if that is a Roth account, all the growth is Tax-Free!

I've taught hundreds of folks how to trade the index, which is my next favorite place to generate retirement income. You can also do that inside of a Roth for tax-free cash flow! With a little practice and patience, you should be able to get good at it. If you do, you will have an unlimited retirement plan and income that no one can take away.

If you don't want to keep all of your retirement money solely in US dollars (not a bad idea these days with the debt the US is growing), look for investments with international interests. You don't have to trade currency to do it. For instance, any company that has worldwide interests (and most do these days) benefits from the currency market anyway. Think about McDonald's and the stores they have all over the globe. (just don't be fully invested in any one stock or market - and don't eat all your meals at Micky D's if you want to enjoy retirement long).

Two other areas to look at are ETFs, and MLPs. Both of these vehicles offer great income and earnings potential. You can even play foreign currency or about anything else you like these days inside of an ETF. This now makes it a whole lot easier to diversify.

With a little research and action on your part, you should have no problem creating the income and lifestyle you planned for in your golden years - even if you are already there!

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