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Q: I have 24.5 years on the job and I am 61 years old. I am planning to retire at 65. To get 80% of my salary, I would have to work 35 years. How can I improve my retirement benefits?
–E. Peterson, Chicago
A: Judging from some of the information you provided be, you have made moves to try to secure your future. Paying yourself first by putting funds in a deferred compensation plan and an IRA, as well as making regular contributions to growth mutual funds, are sound strategies. As part of our black enterprise Declaration of Financial Empowerment, we have encouraged our readers, and visitors to our Website, to pay themselves first.
As part of your retirement goals, it is important that you consult with a financial planner that you have a rapport with. This professional can help guide you with your retirement plans. As you share with them your retirement goals, they will help you develop the right asset allocation plan for you. At your age, you should start moving your assets into less risky investments, such as municipal bonds or Treasuries. Although you need a significant growth component as part of your portfolio, invest 60% in bonds. These will provide supplemental income. As for the equity portion of your portfolio, look for solid blue-chip stocks that will be less susceptible to market volatility. Continue your contributions to your company-sponsored retirement plan and your IRA. And, as you’re putting together your after-retirement income stream over the next five years, look at Social Security-the average retiree receives $10,000 per year-as another supplement. (Federal law eliminates the “earnings penalty” for workers between the ages of 65 and 69.)