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Investing and retirement planning: 5 things to consider

When you think about retirement, you should ask yourself a lot of questions. How old do I want to be when I retire? How much money will I need and where will it come from? Where should I save and invest my money?

If you plan to retire in your 50s rather than your 60s or 70s, you’ll need more money to maintain a similar lifestyle over more years – or you might have to consider drastically changing it. Think about the following five things as you develop your investing approach.

Understanding your investment options can help you build your financial nest egg. Participating in a workplace investment plan such as a 401(k) or 403(b) is a great place to start. If your employer offers a match, invest at least up to that amount so you don’t leave free money on the table.

Consider how other income, like any pension payout or Social Security benefit, fits into your overall plan. Our calculators can give you an estimate based on your retirement age. Including these sources will affect the amount you need to save overall.

Give some thought to your investing timeline. If you have decades of employment ahead of you, you might want to consider a more aggressive investment strategy. You can allocate a greater portion of your portfolio to stocks, which can deliver greater returns than cash or bonds. There’s no guarantee with investments, and remember, they could lose principal as well. But with a longer timeline, you have time to recover from market downturns. If you’re closer to retirement, you should consider less-volatile investments.

Think about your anticipated expenses in retirement. The higher those are, the more money you’ll need. Ideally you should be able to pay off some of the big-ticket expenses, such as a mortgage. As an example, you could downsize to a condominium, put the difference into savings and reduce the amount you need to invest. Determine your fixed expenses like utilities and insurance. Then factor in the type of leisure expenses you want to continue enjoying such as travel or dining out. This should give you a rough estimate of what you’ll need to save and invest.

Don’t forget that inflation can eat away at what a dollar you save today will buy in the future, so factor that into your decisions. If your money’s growth only keeps up with inflation instead of surpassing it, you only have that dollar you put in when you’re ready to pull it out in retirement.

Our knowledgeable bankers are always here to discuss your financial situation and share the many ways you can put your money to work for you. Feel free to lean on our expertise to help you decide how to best tailor your investments for a worry-free future. Give us a call anytime at 937.548.2206.

Investments are not FDIC insured, not bank guaranteed, and may lose value.

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