Catching Up On Your Retirement Income Funds

If your retirement funds aren't going to be enough to live on for your golden years

, you might be tempted to take on extra risk when it comes to your investments. Including more aggressive investment strategies in your financial planning to get better returns from your investments may have crossed your mind. Even if a certain degree of risk is necessary to grow your profits, going beyond a "safe" amount of risk isn't recommended, especially because you can stand to lose a chunk of your nest egg.

You might think that it's fairly safe to invest in stocks more aggressively because of the likelihood of stock market prices going up after a decade of low performance. Economists and investment specialists will advise you otherwise, as your stocks won't give you gains as high as 10% yearly in such a short time frame. Statistics also show that currently, the market is more likely to suffer from dangerous setbacks than many investors expect. You shouldn't take the recovery of stock prices as a signal to move a big part of your portfolio into stock, but be wary of the consequences of your moves - a drop in half of stock prices could destabilize your funds.

Although investment strategy (such as safely playing your stock market investments to put you on the path to an adequate and stable nest egg) should be one of the cornerstones of your financial planning for retirement, it shouldn't be your main focus. Rather, aggressively budgeting your money and saving even more of your salary will help you bridge the gap between your current finances and where you need your nest egg to be.

If you're earning a yearly salary bigger than $100,000 and save 20% of your paycheck, you can boost your nest egg before your retire. Delaying retirement by three years can also help you cover more ground. Add your investment returns to all of your savings and you'll be more prepared to retire.

Besides good investment strategy, aggressive budgeting can help you grow an inadequate nest egg into one that can cover your retirement. Talk to your financial planner to know more about strengthening your retirement funds.

by: Carina Smith

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