Saving and Investing for Retirement
As you age, saving and investing for retirement should take on increasing significance and should rank higher on your list of priorities. This is especially true if you lost out on the opportunity to maximize your retirement savings by starting to save from your early twenties or thirties. Nevertheless, with self-discipline and a fool proof plan of action, you can still manage to set aside a nice nest egg for your retirement if you act immediately.
Swift action is particularly important for the self-employed and other professionals. This is because these individuals may not automatically fall under the umbrella of a structured retirement savings and investment plan such as a 401(k). The implications are that deliberate efforts must be made to save and invest for retirement purposes and the onus is on the individual to create and execute a viable retirement plan. However, you should not allow yourself to be forced into investing in a plan that offers high levels of returns without ascertaining for yourself what the risks are.
There are several individual retirement account (IRA) options that are available for the self-employed. The key is to choose one that will work based on your particular retirement goals, risk tolerance and timeline. It may be a good idea to discuss your retirement goals with an experienced Certified Financial Planner or advisor. The closer you get to retirement, the less of your investment dollars you should allocate to riskier investment vehicles such as stocks. Once you hit 45 years, your retirement portfolio should ideally be concentrated on fixed income instruments such as treasury bills and government bonds. The trade-off is that the income is essentially guaranteed but the returns are likely to be lower. It is better to have a smaller return on your capital than to lose your retirement capital.