Finding your freedom: financial and career independence in your 50s

In this world of endlessly fast-paced change it can be hard to keep track of options when it comes to securing financial independence for an approaching retirement. Notwithstanding that, one of the benefits available to the world’s aging population however, is that it’s now possible for people aged 50 years and over, so-called ‘gray’ entrepreneurs, to become leaders in the world of business investment.

Retirement planning

Making investments for and during retirement has never been so important, which is why it’s vital to get the best possible advice from informed experts right from the start. For example, a professional investment management firm will put its knowledge and skill to good use by surveying all the available options for each client and then putting those in context. For example, this might include the kinds of areas in which an individual feels they need specific financial advice and help.

Most people want a stable future and companies such as Fisher Investments specialize in helping people to make the right decisions. The free guide entitled 99 Retirement Tips from Ken Fisher, offers essential advice for people who are looking to carefully select the most appropriate retirement investments for their personal needs.

Types of investment

As there is a wide range of investment possibilities, each one sometimes more confusing than the next, it is useful to understand the similarities and differences between them.

1. Annuities

Annuities can be complex and difficult to comprehend and many financial experts consider that often they better serve the needs of the insurance companies that write them rather than the investor. Having said that, if you have a reasonable plan that goes back a decent number of years it should continue to pay out at a modest level as long as is needed.

2. Bonds

These are payments made to finance activities or projects, some of which are listed on the New York Stock Exchange. In essence, buying a bond means you are lending money to the organization that issues it for a specific period. In return, you will receive interest at an agreed rate at regular intervals until the end of the period, when the issuing organization repays the face value of the original investment, unless there are complications due to interest rates falling during that period. A professional financial advisor can help outline the key issues involved, depending on the nature of the bond contract.

3. Cash investments

 If low risk returns are preferred, these are available via cash investments. By parking cash in money market deposit accounts, savings accounts, guaranteed investment certificates (GICs) or certificates of deposits (CDs) it’s possible to receive interest at modest, usually fixed, interest rates that are insured by the Federal Deposit Insurance Corporation (FDIC). On the plus side the money is easy to access and safe; on the minus side, however, penalties are payable for early redemption and the return is generally lackluster.

4. Direct investment plans

Some corporations offer the opportunity to investors to reinvest their existing cash dividends by purchasing extra shares on the dividend payment date. This can be convenient for investors who often can purchase at a discount and the transaction may be free of any commission. On the other hand, investors may find they have to pay tax on the dividends, despite the fact they never receive the cash.

5. Employer-sponsored plans

Sometimes known as 403(b)s or 401(k)s employees can gain tax incentives, automatic savings and, in certain cases, matching contributions from these plans. There are limits on the amount that can be contributed annually and penalties for early withdrawal, however, some contributions may be tax deductible and it may also be possible to ‘borrow’ from the plan, particularly in instances of ‘hardship’ – such as needing to buy a first home or sending a kid to college.

6. Individual retirement accounts (IRAs)

This is the equivalent to a savings account that comes with tax benefits. Individuals can put bonds, stocks and mutual funds in their accounts and they have a choice about how investments are managed. The return on investments will determine the eventual value of the IRA.

The most important feature of finding financial freedom is making a retirement plan that will make both the investor and his or her family feel secure. Reputable, professional financial help and advice is vital to informed decision making and it can make a marked difference to the investment choices made and the resulting returns.