7 Retirement Investing Tips


Retirement is a hot topic these days as it should be.  There have been many studies and reports in the media about the sorry state of retirement readiness here in the U.S.  With thousands of us Baby Boomers turning 65 every day this issue will certainly not be going away any time soon.  One of the key factors in achieving your retirement goals is the amount saved and invested for retirement.  Here are 7 retirement investing tips.

InvestingGet started 

Whether you are 25 or 45 or even older get started if you haven’t already.  Whether in your employer’s 401(k) or similar retirement plan, an IRA, a taxable account, or other method the best time to start is today.

Do a financial plan 

If you are in your 30s or 40s or certainly if you are older this is a great time to get a financial plan in place.  A comprehensive financial plan is like an investment and retirement game plan.  The plan should tell you where you are in terms of your retirement goals, how much you need to save to get there, and how to allocate your investment dollars in terms of the returns needed and the level of risk you are comfortable assuming.

Utilize your 401(k) plan 

Whether your company’s 401(k) plan is lousy or great it generally makes sense to utilize it as part of your retirement investing strategy.  For example if your company offers a match you will want to contribute enough to earn the full match, this is free money.  This is also true for similar plans such as a 403(b) or other defined contribution plans.  The automatic salary deferral feature of these plans makes investing easy and painless.

401(k) plans generally offer a menu of investment choices that include both individual mutual funds (or similar investments) and asset allocation funds such as Target Date Funds.  I’m not a big fan of Target Date Funds for those in their mid 40s or older but they can be a solid choice for younger retirement investors and anyone who is not comfortable allocating their own account.

Utilize IRAs 

IRAs can be used in a number of ways.  Anyone can contribute to an IRA.  The contribution limits for 2013 and 2014 are $5,500 for those under 50 and an extra $1,000 for those 50 and older.  Traditional IRA contributions may or may not be tax-deductible depending upon your income level and whether or not you are covered by a workplace retirement plan.  You may also be able to contribute to a Roth IRA, again there are income limitations.  If you are a non-working spouse you can contribute to an IRA as long as you’re working spouse earns enough to fund the IRA.

It is likely that you will switch employers a number of times over the course of your career.  An option for an old 401(k) account is to roll it over to an IRA.  This option can allow you to combine several old 401(k) plans and often allows greater investment flexibility than leaving the money with your old employer or rolling the old balance to a new employer’s plan.

Use self-employed retirement plans 

If you are self-employed you need to provide your own retirement plan.  Two great options are the SEP-IRA and the Solo 401(k).  Whether these or other options don’t pass up this opportunity to save and invest for your retirement.

Tread carefully with annuities 

Annuities can be a viable investment vehicle for retirement.  However you need to tread carefully here.  Whether a variable annuity, fixed annuity, equity index annuity, or some other form of this product you need to understand all fees, expenses, and restrictions.  There is nothing wrong with annuities but there is plenty wrong with many of the annuities sold and the methods used to sell them.

Make sure you pull it all together 

Regardless of the type of account you use or the types of investment vehicles chosen it is vital to view your retirement investments in the context of an overall portfolio.  IRAs, 401(k)s, taxable accounts, mutual funds, ETFs, individual stocks, and other investment vehicles must be viewed in terms of their role in your overall retirement investment strategy.

Not doing this can lead to overlapping holdings and taking too much or too little risk.  And remember investing for retirement includes not only investing to retirement but also investing in an appropriate fashion once you actually do retire.

Please contact me at 847-506-9827 for a complimentary 30-minute consultation to discuss  all of your investing and financial planning questions. Check out our Financial Planning and Investment Advice for Individuals page to learn more about our services. 

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