Investing For Retirement – Building a Solid Financial Foundation for Your Future

Before investing, make sure your emergency savings are fully funded and debt is under control. Then, focus on building your retirement savings, especially if your employer offers a matching program for your 401k contributions.

You can also use tax-advantaged retirement accounts like IRAs, which let you invest with after-tax dollars. And consider a strategy that maximizes your potential for long-term returns, such as an index fund or annuity.

Getting Started

The key is to begin saving early and regularly. Take advantage of tax-incentivized retirement accounts (such as 401(k) and IRAs).

Consider investing in companies that pay dividends, as these payments typically increase over time. Then allocate the majority of your portfolio to stocks, as these can have higher growth potential than bonds.

You may want to look into an income annuity, which can provide a stream of guaranteed payments throughout your lifetime. This can be useful if you expect to need help covering expenses after retirement. It is also important to have enough emergency savings set aside for unexpected expenses. These could include a job loss, market declines or long-term care costs.

Asset Allocation

One of the most important aspects of a successful investment strategy is asset allocation. A person saving for retirement that is decades away might be able to afford a larger percentage of riskier stocks, while someone who is close to retiring may want to reduce the amount they put into stocks and increase their allocation into safer assets such as bonds or certificates of deposit (CDs).

Conventional advice often states that an investor’s portfolio should consist of roughly equal parts stock and bond investments. Additionally, many retirement portfolios include alternative investments such as real estate or art, which can produce steady secondary income and mitigate overall portfolio volatility.


Investing always involves risk, but diversification can help reduce the impact of big swings in your retirement account value. Consider choosing an asset allocation model that aligns with your financial goals, risk tolerance and time horizon.

Diversification can also extend to the types of investments you own, so losses in one category may be offset by gains in another. Stocks and bonds are common investment categories, but you can also diversify your portfolio with funds, real estate, CDs and savings accounts. These assets may have different risk levels and offer different returns over time. They can also be a good way to keep your investing expenses low.


Stocks are usually the largest part of an investor’s holdings, especially when they are young and saving for retirement. However, if you are close to retirement or already in it, you may want to make your stock portfolio more conservative, adding a greater percentage of bonds and other fixed income investments.

Consider using exchange-traded funds (ETFs) that track a particular index instead of individual stocks. These ETFs typically come with lower management expense fees than traditional mutual funds. They can also help you find a wide range of stocks for less money than buying individual shares. The key is to keep reviewing and adjusting your portfolio as needed.


The more you save, the less risk you’ll take when it comes to investing. That’s why it’s important to set realistic savings goals.

If you have a short time horizon before retirement, you may want to decrease your equity exposure and increase the share of your portfolio invested in bonds. Bonds provide a safer investment option that can help balance the volatility in your portfolio.

Investing in bonds outside of a retirement account offers you greater flexibility to access your money if you need it before the end of your planned term. For example, a nonretirement brokerage account allows you to withdraw funds without penalty before reaching age 59 1/2.

Other Investments

The key to investing for retirement is to have a plan that aligns with your financial goals, risk tolerance, and timeline. A financial advisor can help create a strategy that fits you and your needs.

Maximize employer-sponsored retirement plans such as 401ks, and be sure to take advantage of any matching programs. Traditional individual retirement accounts (IRAs) and Roth IRAs can also offer tax savings.

Consider dividend-paying stocks to add steady income in retirement. This can be a great way to supplement other investments, especially in times of market volatility.

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