Retirement should be like a second childhood ... without parental supervision. I believe that's doable for most people, but it takes planning.
Think about the retirement lifestyle you desire, and find a location that supports it. If you want to travel, you may opt to downsize to a condo. If you want peace and quiet, a small town could be the ticket. If you want to have more money at your disposal, you might want to move somewhere with lower taxes and a lower cost of living.
After you retire, you no longer have somewhere to go every day. You're cut off from your typical social network. It can be a surprisingly difficult time. Try to avoid post-retirement depression by contemplating what you want to do and beginning it now.
I believe that when you are retired, so should your debt be retired. If you have no mortgage, no car payment and no credit card debt, most of your expenses will be variable costs you can control. Wouldn't that feel great? Want to begin now? Make a list of all your debts, then rank them by highest interest to lowest. Depending upon the terms and conditions of the loans, it usually makes sense to start paying off the highest interest debt first and work your way down until you have paid off all your debt.
Once you're five years away from retirement, I believe you need to adopt a defensive investment philosophy. You may have invested more aggressively while you were growing your money. However, now would be the time to diversify and reduce your risk to help avoid losing a big chunk of your retirement to a bear market. We recommend and often employ several defensive strategies with our Money Matters clients, such as rebalancing their portfolios quarterly; reducing their exposure to equities; and creating stop-loss strategies to mitigate downside risk.
It's an unfortunate fact of life: Health care becomes more critical (and potentially expensive) as we age. Don't forget to include it in your plans, especially if you want to move or travel extensively. For example: Medicare may not pay for expenses incurred outside of the United States, so you might consider buying a private insurance policy to fill that gap.
How much money will you need to support the lifestyle you want? I suggest you come up with two numbers. The first is the amount you need to cover the things you need, like food, housing and health care. To get your second number, add the costs of the things you want -- like travel or a club membership. Create a financial plan that gives you a high probability of achieving the necessities, and then add the luxuries if possible.
If you're waiting until your full retirement age to collect Social Security, it's recommended that you apply at least three months before you want your benefits to start (you may apply as early as four months before your full retirement date). Make sure you have all the documentation needed. You can find a list of required documents here.
Shares of Nike Inc. (NYSE: NKE) were up 12% as of 1 p.m. EDT Friday after the athletic footwear and sportswear giant announced strong fiscal fourth-quarter 2018 results.
Nike's quarterly revenue climbed 12.8% year over year to $9.789 billion, and translated to 15% growth in adjusted earnings per share to $0.69. By comparison, the company's own financial guidance called for more modest revenue growth in the high-single-digit percent range. And most investors were only expecting earnings of $0.64 per share.
Perhaps most exciting, Nike's strong quarter came on the heels of an earlier-than-expected return to growth in North America, where NIKE brand sales climbed 3% to $3.875 billion. For perspective, last quarter the company told investors that North American revenue would be roughly flat on a year-over-year basis, followed by a return to growth in the first half of fiscal 2019. Including international sales, total NIKE brand revenue climbed 14% -- or 9% at constant currency -- to $9.269 billion.
"Fueled by a complete digital transformation of our company end-to-end," Parker added, "this year set the foundation for Nike's next wave of long-term, sustainable growth and profitability."
If that wasn't enough, Nike also authorized a new four-year, $15 billion share repurchase program, which will commence after Nike uses the $3.3 billion remaining under its original four-year buyback authorized in late 2015.
Finally, the company modestly increased its guidance to call for fiscal 2019 revenue to increase in the high-single-digit range -- a more aggressive goal than its previous outlook for mid-to-high single-digit growth.
In the end, there was nothing not to love about this stellar performance, and it's no surprise to see Nike stock trading at an all-time high.
Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Nike. The Motley Fool has a disclosure policy.