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How to Develop an Investment Plan for Retirement

By U.S. News & World Report

The need to invest wisely doesn’t stop when you amass enough money to retire. You must continue to make smart investment decisions throughout your retirement years. Here are some components of a successful retirement investment plan.

Figure out how your investments will impact the lifestyle you desire. Daydreaming is not only desirable, but also essential to determine how you want to enjoy your post-career life. Different goals dictate different investment strategies. For example, if you enjoy researching investments and making personalized decisions to try to boost your returns, then active investing may be for you. If you want to capture market returns without doing a lot of additional work, consider index funds. Similar considerations are necessary for managing rental properties. You might be able to build a portfolio of rental homes to generate retirement income, but there may come a point when the rental income is not worth the additional hassle. Think about how involved you want to be with your investment portfolio during your retirement years and the long-term repercussions of the investment decisions you are making now.

Come up with a withdrawal strategy. Once you envision a lifestyle worth retiring to, it’s time to estimate how much that way of life is going to cost. With that number, you can calculate how much you will need to save to pay for 20 or 30 years of retirement. You can use a rule of thumb like the 4 percent withdrawal strategy to get an idea of how much you can safely spend each year. Just remember that these rules of thumb are only guidelines. Very few people will be able to determine a spending amount at the onset of a multi-decade retirement and expect yearly expenses to fluctuate with the official inflation rate.

Consider the tax consequences. It’s a good idea to know how you will withdraw funds from your portfolio. Think about whether you want to take money out of your taxable accounts first, and when you will be withdrawing funds from your tax-deferred accounts. While you may be able to spend interest and dividends at first, many people will eventually need to select the investments they are going to liquidate to pay for living expenses. You can certainly change your mind later on in retirement, but it’s important to at least have an idea of how you will take money out before you actually have to do it in order to minimize tax consequences.

Consider having a professional help you draft the plan. Not every advisor will be able to earn you enough in excess returns to overcome the fees charged. But an advisor can still be helpful in a variety of other ways. A financial planner can motivate you to take action to invest, when you otherwise would be sitting in cash for too long. He or she can also help you to stay the course when the market is crashing, so that you will benefit from the subsequent recovery. We often feel emotional about our money, and a rational perspective from the outside can help.

Accept that your plan will change. Making sure your plan can stand the test of time is important. But any financial plan you establish will also need to be changed constantly. You may have grandchildren or develop an illness. These will all change how you want to spend your retirement resources. The investment landscape can fluctuate, causing you to tweak the way you have the portfolio invested. You may even view money differently as you age and your assets increase. It’s common for people to become more charitable as they age. Each lifestyle change will have a material impact on your spending, which will require adjustments.

David Ning is the founder of MoneyNing.com .

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How to Develop an Investment Plan for Retirement originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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