Saving for Retirement

In: Business and Management

Submitted By cam34
Words 922
Pages 4

Americans in the work field are faced with a lot of challenges when it comes to saving for retirement. You don’t want to be too cautious (relying on just treasury bills that have barely kept up with inflation the last 70 years being an extreme example.) You don’t want to put too much weight into your stocks making your portfolio too risky and possibly jeopardizing your earnings and prolonging your retirement date. Your ability and willingness to take risk directly relates to your expected returns. A lot of factors go into your ability to generate returns through mutual funds, stocks and bonds.

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Your age also plays a role in how you will invest for your retirement. The older you are and the closer you are to retirement, your tolerance for risk in your portfolio will go down. When you are close to retirement, the last thing you can afford is losing your savings. If you are younger and are many years away from retirement you will be more inclined to put more weight into stocks because if the market takes a downturn you have more time to recover your losses. Whether you are employed or not determines your willingness to take risk in terms of your ability to replace financial losses that may occur with your active income. Also an often overlooked factor that comes with investing for retirement is your psychological ability to tolerate the stress of a serious downturn in the market.

Getting Started:

A good starting point for employees in the work force saving for retirement and investing for retirement starts with setting up a 401(k) through their employer. By doing this, your savings are invested through corporations like Fidelity in various stocks, bonds, and mutual funds to generate returns for you. As an investor you have different “paths”…...

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