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Essential Steps to Take After Reaching $100,000 in Retirement Savings

Reaching the milestone of $100,000 in retirement savings is commendable. It signifies that you have successfully set aside funds that surpass the savings of many other individuals across the nation.

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However, it is crucial not to become complacent. If your retirement could last for 30 years or beyond, it’s clear that $100,000 alone is insufficient to sustain you throughout your golden years. With this six-figure sum in your retirement account, consider taking a moment to assess and organize the rest of your financial landscape.

Key Financial Steps After Hitting the $100,000 Mark

Although achieving $100,000 in retirement savings is an excellent step towards ensuring financial security, it is dire to address any existing debts. The current average credit card interest rates hover around 25%, which can lead to a turbulent financial situation if not managed properly.

Diverting some of your finances to settle debts can hinder your ability to invest further. If your retirement account balance exceeds $100,000, it may be prudent to focus on debt repayment before continuing to funnel money into your investments.

Building an emergency fund is also a foundational aspect of any robust financial strategy. Even with a substantial retirement balance, financial emergencies can still arise.

Unexpected costs, like car repairs or *uncovered medical expenses*, can lead to premature withdrawals from your retirement savings. This approach can worsen your situation, as it often results in income taxes and penalties, particularly if you’re under age 59 and a half.

The alternative, accumulating further debt, is also not advisable. Establishing an emergency fund of at least $1,000, with a goal of having three to six months of income set aside, is critical for ensuring your long-term financial health.

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While a $100,000 balance in your retirement savings is impressive, it’s important to recognize that it’s not a guarantee for a fully funded retirement. Once you’ve reached this goal, you should aim to continue saving and even increasing your contributions to ensure you have ample resources for your retirement years.

For instance, if you’re saving $100 monthly at age 40, your investments could grow to approximately $829,000 by age 65 with an 8% return. Increasing your savings to $300 per month could potentially elevate your final balance beyond $1 million, demonstrating the significance of consistent saving.

Reassessing Your Investment Strategy

It’s advisable to review your asset allocation at least once a year, but particularly after surpassing the $100,000 benchmark. This is an excellent opportunity to evaluate your investment strategy and performance.

If you have built your portfolio with conservative growth strategies, consider shifting to a more aggressive approach to capitalize on potential higher returns as you aim for a larger retirement fund.

Conversely, if your investment strategy has been highly aggressive, maintaining a balanced portfolio could safeguard against drastic market fluctuations and preserve your gains.

A significant market downturn could severely impact your finances, as recovering from such a loss requires substantial gains. Thus, reassessing your investment strategy is crucial.

Consulting a Financial Advisor

Given the uniqueness of individual financial situations, broad strategies may not always address specific needs. Engaging with a financial advisor once you have at least $100,000 in retirement savings can be a wise move.

A knowledgeable advisor will evaluate your financial goals, risk tolerance, and overall needs to craft a comprehensive financial strategy. They can also guide you through critical areas like beneficiary planning, Social Security strategies, end-of-life considerations, and necessary insurance products to protect your wealth.

A financial professional can also propose additional investment options that align more closely with your future goals.

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This article originally appeared on GOBankingRates.com: 5 Things You Must Do When Your Retirement Savings Reaches $100K

Source
finance.yahoo.com