Don’t Let Age Stand in the Way of Sound Retirement Investing

Retirement looks different to a 40-year-old than it does to a 60-year-old. Your investment strategy should change the closer you get to retirement.

Here are some points to consider:

Investing Under 50

Statistically, your peak earning years start around age 45. This can give you greater flexibility to assign more income toward retirement investments. If you’re the type of person who prefers a hands-off approach, investing in a target-date retirement fund may be right for you. These funds change asset allocation between stocks and bonds based on your age. During this stage in your life, the fund may have an aggressive mix of 85 percent stocks and 15 percent bonds. As you near retirement, the fund automatically shifts toward more bonds and less stock to help protect your investments from greater market volatility.

That said, be aware that more bonds does not necessarily mean less risk. For this reason, once you’ve accumulated your assets, follow the lead of larger institutional investors such as pensions and charitable foundations, by employing wealth managers that utilize a more tactical approach. This strategy has a proven track record of significantly reducing downside risk, while maintaining access to healthy appreciation when it occurs. In short – defensive in bad markets, opportunistic in good.

Investing at Ages 50+

This is where your investing gets serious. During this stage, retirement begins to look like reality. You want to balance your growth and limit volatility. For many people, these are key investment years for several reasons:

Empty Nesters 

Your kids have finally flown the coop. Now the money you used to spend on them (food, transportation, college) can go right into working for your retirement.

Peak Earnings 

The peak earning years go through age 54, so hopefully you’re able to combine your earnings coupled with the savings from being an empty nester to help you maximize investing.

Playing Catch-Up 

There’s a good reason to celebrate being 50 and over. Each year you’re able to invest an additional $6,000 in your employee-sponsored 401(k) or 403(b), giving you a total of $24,000 that you can invest in the tax-deferred account. On top of that, you can sock away an additional $1,000 in a traditional or Roth IRA for a total of $6,500 a year.

No matter what your age, aligning with a board Certified Financial Planner can provide a clearer vision for planning a course toward your golden years.