Don’t wait until you are in your 40’s to think about saving for your retirement. By then you will out of time! The best investment strategy begins in your 20’s and continues through every decade of your adult life.
Get Started in Your 20’s
You may be just starting out in life, but that does not mean that you should put off thinking about the future. Every decade comes with its own challenges, and your 20’s are no exception.
You are making less today than you will be in 10 years; you probably have student loans to deal with; and you need that start-up cash to get the things you need. But wait! Starting a retirement account should be high on your to-do list. Here’s why:
When it comes to investing in your 20’s, most experts agree that this is the time to set your expectations, build the right habits and take more risk. Your 20’s are e a good time to consider higher risk investments that can garner higher returns. At this stage of life, you can handle some set-backs and rebuild your portfolio if something goes awry.
Investing in Your 30’s
Life is in full force during this decade. Maybe you have recently married, bought a house and started a family. These are all expensive changes that can thwart your savings effort.
While this may not be a time when you can invest more, be sure to continue at a steady pace. Take at least a small portion of any annual raises to increase your 401K contributions and avoid accruing nay additional debt. Use savings for larger purchases whenever possible.
Your 30’s are also a good time to invest in both high and medium risk stocks. With time on your side, you should be able to weather any financial storms, while giving yourself ample opportunity to experience the benefits of higher yields.
Investing in Your 40’s
Retirement doesn’t seem so far off at this stage of life. If you have managed to control your debt, you are beginning to see many of your bills beginning to dwindle away. Take that extra money and put it into retirement investments.
This is the time to become a bit more conservative in your investment approach. Opt for safer (albeit lower-yielding) stocks and bonds. With less time to recover after a financial collapse, now is the time to let your money build more slowly - and safely.
Investing in Your 50’s and 60’s
Nearly a third of all 50-somethings have less than $10,000 socked away for their retirement. The Employee Benefit Research Institute reports that less than 25% have saved at least $250,000 for their retirement years. This is scary news for the millions who face retirement in the next decade but have failed to prepare.
Still, there is hope. Research shows that most people save the most during their last decade on the job. The reasons are twofold:
They are running out of time and know it, so they make savings a priority
Those big expenses like mortgages, children, and tuition are gone, freeing up more of their cash
This is good news for those eager to stash away enough cash to live on comfortably in their later years.
While your 50’s is not the time to make risky investments, there are some simple strategies you can use to garner the most benefit:
Saving for retirement can be a daunting experience. But, learning how to strategize your investments throughout your adult life can help make the process easier, as well as more beneficial.