Financial Literacy - Retirement income planning
Can this couple retire early?

The plan in 4 steps
1) Build up emergency savings cushion.
  • This is important because Joanne and Pat work for same employer.
  • Stop buying individual stocks in taxable account.
  • Check status of old savings bond.
Tip: Search Bankrate for the highest yields on money market accounts or CDs.
2) Tweak investments.
  • Redirect monthly retirement contributions into no-load funds to reduce commission expenses.
  • Eliminate overlap in U.S. stock funds held in Joanne's 401(k) plan.
  • Tweak allocation in 401(k) to include bonds, international equity exposure.
  • In Roth IRAs, buy investments not available in 401(k) plan such as inflation-linked bonds, real estate investment trusts and commodities.
Tip: Read Bankrate's story, "How to build a sound portfolio."
3) Consider getting life insurance.
  • Look into a modest term life insurance policy that would provide a valuable buffer in the event tragedy strikes.
Tip: Read Bankrate's story, "Life insurance for different life stages." Get a quote from InsureMe, a Bankrate company.
4) Re-evaluate retirement goals in a few years.
  • Dream of retiring at age 59½ is attainable if savings discipline is maintained.
  • If retirement goals change, consider working longer to save more.
  • A modestly priced vacation home is within reach.
Tip: Read Bankrate's story, "How to tell if you're on track."

This report was prepared by Bankrate Senior Financial Analyst Greg McBride, CFA.

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