Retirement Marathon

You can take different routes to long-term financial security, but you need a strategy.

retirement marathon
If financial security and the satisfaction that comes from meeting your long-term goals are important to you, the first step is deciding what those goals are and what your timeframe is. Then you can take steps designed to help you reach them.

Accumulating investment assets that have the potential to increase in value and provide a source of income is an essential element of planning for the future.

Ready, Set, Go

You can start investing for retirement when you earn income for the first time, whatever age you are and whatever work you’re being paid to do. That's when you can begin contributing to an individual retirement account (IRA). You can participate in retirement plans that your employers offer. If you work for yourself or own a small business, you can establish your own retirement plan. In fact, ideally, you'll take advantage of several of these ways to accumulate retirement savings during your working life. These dedicated assets, in combination with your taxable investment accounts, Social Security, and an employer pension if you have one, are the foundation of a financially secure future.

In Your 20s: Getting Started

You can get a head start on building your financial assets if you start early.

The opportunities you don't want to pass up:

While you may be paying off college debts or struggling to meet living expenses, the advantages of getting an early start on long-term investing are too good to pass up.

Ideally, you should be investing at least 10% of your gross income. If you're part of an employer sponsored retirement plan that deducts your contribution from your pretax salary, your taxable income will be reduced. If you contribute after-tax income to a Roth account, you'll eventually be eligible for tax-free withdrawals.

You may want to divide your taxable investments between a liquid emergency fund to cover unexpected expenses and assets that have the potential to increase in value, over time.

In Your 30s & 40s: Hitting Your Stride

ven while you're juggling your income to pay for things that might seem more pressing, like buying a home, supporting a family, or anticipating your children's college expenses, you need to build your long-term investments.

One technique is to split the amount you invest between long- and short-term goals. Even if you put less into long-term plans than you'd like, these investments have the potential to grow, especially if you're building on a portfolio you started in your 20s. It's still the case that long-term investments should be in stocks, stock ETFs, or stock mutual funds, but short-term investments should be more liquid.

Keep in mind that investing for the long term is good for your current financial situation too:

In Your 40s & 50s:

TYou may be earning more than before, but you may be spending more too. College expenses can wreak havoc on long-term investment goals. So can expensive hobbies or moving to a bigger house.

That means you can begin to put more money into your long-term portfolio — through your employer's retirement savings plans, investment advisory or brokerage accounts, IRAs, and some income-producing investments such as bonds and perhaps limited partnerships.

In Your 60s: The Home Stretch

When you start thinking seriously about retirement, you need a plan to be sure you'll have enough money to live comfort- ably. If you have income coming in from a pension and investments, you'll have more flexibility to retire when you want.

Because you can expect to live 20 or 30 years after you retire, you'll want to plan to continue to invest even as you begin to withdraw from your retirement plans. One approach is to deposit earnings from certain investments into an account earmarked to make new ones. Another is to time the maturity dates of bonds or certificates of deposit (CDs) so that you have capital to reinvest if a good opportunity comes along.

Some of the other financial decisions you'll be facing may be dictated by government rules about when and what you must withdraw from your retirement accounts. Others may be driven by your concerns about healthcare or your desire to leave money to your heirs. At the least, you'll have to consider:

Protecting Your Future

To safeguard your financial future and the future of people who matter to you, you need a strategy that builds your assets at the same time it protects them against the assaults of taxes, inflation, and market ups and downs. The sooner you put a strategy in place, the stronger your position will be.

What The Future Holds

IThe truth is that retirement age is relative, not fixed. Some government workers retire after 20 years of service — sometimes as soon as their early 40s. Some people work productively through their 80s, thinking of retirement as something other people do. Many retire the first day they're eligible. Still others leave work unwillingly, taking early retirement packages they can't refuse.

What you think about retirement may fit one of those patterns, or may be one you design for yourself. But whether retirement is a long way off, or sneaking up on you faster than you care to imagine, there are good reasons to save as much as you can in as many ways as you can: