Advice for saving for retirement in tough times

Finding the right retirement strategy can be difficult amid a volatile stock market and inflation. But there are ways to save safely, senior retirement planner Ken Moraif, of the American Retirement Planning Organization, told Yahoo Finance Live (video above).

First, Moraif said workers nearing retirement need only diversify a small amount of their portfolio to maximize returns and reach their retirement goals.

“Risk control is extremely important in our opinion. We have a philosophy that says you should only take as much risk as is necessary to achieve your financial goals. “Risk control is the number one thing to determine how much risk is appropriate for you and act accordingly,” Moraif said.

Close-up of an elderly couple reviewing their household finances

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In addition to controlling risk, recent laws can help people keep their retirement accounts growing. That’s because the SECURE Act 2.0 gives savers more time to withdraw money from their retirement accounts and accumulate savings for their future.

“The SECURE Act 2.0 basically gave us some planning options… it used to be (that) you had to take 70 and 1/2 required minimum distributions. Then it became 72. Now it’s 73. So you can actually grow your money in your IRAs over a long period of time before you have to take out the money,” Moraif said.

Moraif added that while many financial advisors say people should start saving for retirement in their 20s and 30s, you can still reach your retirement goals by putting money into your 401k in your 50s. . It can still help people meet their retirement goals and reach what he calls the “magic number” people need to retire comfortably.

“There are some advantages in terms of being able to put more money into your 401(k) if you’re over 50.” So there’s a lot of planning opportunities that (Congress has) created to help build that retirement, to get to that point where you can retire at what we call your magic number,” Moraif said.

Mother and son meeting with real estate agent or financial advisor at home

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He also emphasized the tax benefits of older workers who contribute as much as they can to their retirement accounts so that employers can match all contributions. The maximum 401k contribution for all workers in 2023 is $22,500. Workers over 50 can match contributions and put an extra $7,500 into their $401k. If workers have an IRA, they can contribute an additional $1,000 to their retirement accounts.

“If you put more money into your 401(k), hopefully you’ll get a match (from your employer), which is free money. You get a tax deduction, potentially, which is also a subsidy.” In other words, Moraif added, “Put your retirement savings on steroids and (max) them.”

Moraif also dismissed another common financial belief that workers should buy and hold stocks until they retire. He said that workers retiring in five years and people who have been retired for five years should sell investments when necessary as part of a risk management strategy.

“We believe the buy-and-hold philosophy is incomplete,” Moraif said. “You should have a sales strategy.” I know that sounds crazy because you’re raised to think that you should buy (stocks) and hold them forever, but once you get into that decade, we feel that the protection of directors is very important.”

Ella Vincent is a personal finance reporter for Yahoo Money. Follow her on Twitter @bookgirlchicago

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