Keys to Successfully Saving For Retirement
October 7, 2009 – 5:37 amHave you ever thought about where you should put your savings when planning for your retirement? There is no hard and fast rule because people of different ages and those in differing situations make this decision complex. I’d like to offer my own personal guidelines though and ask for feedback!
Here are the steps I would recommend without knowing a person’s detailed financial and personal situation:
- determine your asset allocation (this is a lengthy topic that has been discussed on numerous blogs including this one in the past).
- determine how much you want to save in after-tax accounts. Saving some money for retirement in aftertax accounts will give you flexibility in the future, and could also be considered your “extra” emergency fund. I recommend setting a targeted % of your total portfolio, but you can also pick a fixed dollar amount. A 5-15% target is probably where my mind is focused at the moment, but yo must make your own investment decisions that are right for your personal situation. Investing for retirement will be more efficient in 401k’s and IRA’s, but flexibility has value as well.
- Save first in your 401k up to the match amount. If there is no match proceed to the next step
- Save in your Roth if you are able to (i.e. you’re under the income limit)
- Save in a traditional (self-directed) IRA at a reputable mutual fund company (Vanguard, Fidelity) if you couldn’t invest in a Roth. You’ll have more investment choices here, and you’ll likely have better investment choices as well.
- Save in your 401k until it is maxed out.
- Save in after-tax accounts (like the third step above).
If You Liked This Post Then Please Check These Out...
|
