Question: I have several thousand dollars in my savings account and wonder whether I should start buying stocks again or think about my mortgage. My broker is recommending some stocks, but I’m not sure after losing a lot of money on them. I want to retire in a couple of years, and still have about 15 years left on my mortgage.
Answer: Though it sounds like you are wondering whether stocks are a good deal, that’s not particularly relevant to your situation.
Because you are planning to retire soon, you cannot count on stocks to make up for losses in your savings. Predicting what the stock market will do over a couple of years is impossible, even when stocks seem like a sure thing.
But there are two moves that will provide more certainty about how you will survive in retirement.
Make sure your savings will match your retirement living expenses. And pay down your mortgage to increase the likelihood that you will be OK in retirement, even if your investments let you down.
The first step is one most people skip because it seems overwhelming. Looking into the future before retirement is not difficult if you go to 360financialliteracy.org/Financial+Topics/Retirement+Planning. Under “retirement planning basics,” find the “personal cash flow worksheet” to calculate likely expenses during retirement. Then use the “retirement income calculator” to understand how your savings will last into your 90s.
“Seriously consider delaying retirement …
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