Reaching your retirement goals depends almost entirely on the saving and investment decisions you make today. By creating your plan — and sticking to it — you put in place the foundation of a financially independent future.
Your financial situation is unique, so your strategy should be as well. You should also adjust your strategy as your priorities change and as you draw closer to retirement. The basic plan is the same for most people — and it all starts by starting.
Six tips to help you along the way:
Make this a top priority at any new job. Enrolling in your employer plan is easy. Most industry sources recommend contributing 10% but even 3% can start you down the right path. Plus, rolling your savings from previous employer plans into your current plan can give you a single-view picture of your situation.
Of course, you are encouraged to discuss rolling money from one account to another with your financial advisor or planner, considering any potential fees and/or limitations of investment options.
Since money you put in your employer-sponsored retirement plan comes out of your paycheck before taxes are taken out, it may be worth more in your retirement account than in your pocket.
Think long term when you invest for retirement. Starting early gives your investments more time to weather the ups and downs of the stock market.
Focus on your retirement milestones:1
You can help minimize the effects of market ups and downs on your overall portfolio by diversifying your holdings. You do this by dividing your holdings across a variety of options available within your plan.
It’s difficult to predict when and how the markets will shift. Consulting a professional to come up with a strategy and sticking with it is often the best plan.
As tempting as it may be to borrow or withdraw a portion of your money, try to avoid doing so. Taxes and penalties are only a part of the cost. The full impact is realized over time as you lose the compounded interest of that money. It may be better to find other less costly ways to address short-term financial needs.
1 Source: www.dol.gov/ebsa/publications/nearretirement.html
2 Diversification does not ensure a profit and does not protect against loss in declining markets.
This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.