Today I have an awesome guest post from David Warren, the senior writer and lead researcher at HardStacks. Read more about him at the end of the post.

Many people dream of retiring early at 50 and spending their lives living the dream. Traveling, charity work, more time for family and hobbies are just a few things on their list of things they long for in retirement.

The reality is more people than ever before can’t afford retirement. The average retirement age in the United States is 63 years old.

Experts state the age of retirement is rising both in the U.S. and around the world. The main reason is the cost of living longer, experts state.

“Definitely every country in the developed world,” said Arie Kapteyn, an economics professor, in an interview with radio station WBUR in Boston.

“And the reason is the same as in the U.S.: people are getting healthier, they live longer. Therefore, they need to be supported for a longer period and at some point, that just becomes unsustainable.”

The fact is most people don’t have enough retirement savings. A Government Accountability Office study in 2015 found Americans between 55 and 64 have, on average, have saved $104,000 for retirement. That only amounts to $310 a month for those who invested in a lifetime annuity.

You also must also consider the cost of living longer. There are more doctors’ appointments, more ambulance calls, more tests, more prescription drug and possibly in-home nursing care, physical therapy, occupational therapy, memory care, and long-term care that can all play a role in you maintaining your health.

How Much Should You Save?

It really depends on your age. Those in their 30s should have a retirement savings equivalent to a year’s salary while forty-somethings should have three times their annual salary saved. Those in their 50s need four times their annual salary saved while those turning 60 should have saved six times their annual salary.

What Else Can You Do?

Saving is only one aspect of preparing for retirement. Saving alone isn’t going to ensure you have all you need to live on for the rest of your life. Your money needs to grow during the decades while you are working and continue to make money after you retire. You need to invest.

Investment experts will all tell you two things:

  • You need a diversified investment portfolio.
  • The older you are, the more conservative your investments should be.

The exact percentages of stocks to conservative investments have changed in recent years. The old formula was to subtract your age from 100 and the answer is the percentage of stocks you should own. Now, with people living longer and sometimes past 100, the new formula uses either 110 or 120 as the starting number.

Most investment advisors tell clients to be really aggressive in your stock investments in your 20’s and 30’s and start to move money into safer investments beginning in your 40’s. By the time you retire, less than 20 percent should be in stocks or aggressive investments.

What Other Investments Are There?

There are many more ways to invest other than stocks. All carry a certain amount of risk and all have their advantages and disadvantages.

The first step to widen your investment options is to have a self-directed IRA. This option allows you to include a variety of investments not found in a typical IRA, such as real estate, precious metals and cryptocurrencies.

Choosing this option means you will need to do research to find the best investments for you, rather than depending solely on the broker.

For example, if you’re interested in adding precious metals to your retirement account, make sure to check the ratings of gold IRA companies to learn how they compare amongst the rest of the pack. Additionally, it’s important to read customer reviews to find out more about their experience and if the company is a right fit for you.

What Should Be in a Diversified Portfolio?

A diversified portfolio is a must because it helps protect you against investment losses.  A diversified retirement portfolio can include:

  • Stocks
  • Mutual funds
  • Treasury securities
  • Real estate
  • Precious metals
  • Cryptocurrencies

1. Stocks

Some of the best stock investments are in industries you already work in or know something about. Having knowledge of an industry can help you pick stocks others may not be aware of yet. Blue-chip companies are safe investments and are likely to withstand the changing financial tides of the future.

2. Mutual Funds

Mutual funds are a collection of stock securities pooled together and managed by a professional. It collects money from various investors to buy the securities. The category can include money market funds, stock funds, bond funds or hybrid funds.

3. Treasury Securities

The U.S. government backs treasury securities. It basically allows the government to use your money to finance government spending with you being repaid at a higher rate of return. They are among some of the safest investments, but are also don’t pay much in interest. They are liquid assets and are worth, at the very least, don’t lose value.

Treasury bills can mature in as little as four weeks while treasury notes take two to 10 years to mature. Treasure bonds are a long-range investment, maturing in 20 t0 30 years. There is also Treasury Inflation-Protected Securities (TIPS) where interest accumulated according to inflation rates. They mature in 5, 10, and 30 years.

4. Real Estate

Real estate is also considered a safe investment. Buying a home is the best real estate investment because you can enjoy it as it builds equity.  Some have found steady income in rental property, both residential and commercial, but that comes with the added responsibilities of finding good renters, collecting rent, and maintaining the property.

5. Precious Metals

Precious metals, like gold and silver, are considered great long-term investments. Values rise well over 20 years, but can rise and fall in the short-term.  Even so, precious metals don’t lose value below what you initially paid for them as long as you keep them for several years.

6. Cryptocurrencies

Bitcoin is the newest form of investing. People are looking at bitcoin because it has dramatically risen in value in the past seven years. However, financial experts are not convinced it is a stable investment and predict the cryptocurrency bubble will eventually collapse. Cryptocurrency experts disagree, stating Bitcoin will rise to $20,000 a coin.

Final Words

Preparing for retirement is a highly personal matter. A lot of the plans you make today depends on how you want to live in retirement. Looking at all your options will give you the answers to need to make the right decisions.

About the Author:
David Warren is the senior writer and lead researcher at HardStacks. He has been a financial engineer for over 30 years and has been investing in alternative assets since the Great Recession of 2008. He has a true passion for learning about economic cycles and educating others on how to protect and grow their wealth by investing in precious metals, real estate and cryptocurrencies. Follow him on Facebook.