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Matthew Tuttle

Matthew Tuttle

Certified financial planner and author

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Jonathan Pond

Author of The Boomer's Guide to a Great Retirement

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Terry Savage

Personal finance columnist for the Chicago Sun Times and best...

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Making Sense of Retirement Planning

Diversity Is Key

There are many ways to make your money grow as you patiently wait for retirement. Diversification is an important consideration when investing, be it in stocks, bonds, mutual funds or anything else.

“However your retirement-savings plan is structured, make sure it is well diversified to lower your overall investment risk,” Carlson says. “This strategy means investing in different asset classes and among the securities of many issuers.”

Younger savers can invest more aggressively, but shop around for funds with more of their assets in equities (stocks). For example, T. Rowe Price’s 2010 fund includes about 65% of its assets in stocks, while Fidelity’s 2010 fund invests only about 50% in equities. Remember, if you invest too conservatively for fear of losing some of your principal, you may not reach your goal. However, some experts advise caution.

“As we’ve seen lately, there’s also a lot of volatility in stocks,” Carlson says. “As you age, you’ll want more of your money in bonds and money-market accounts. These have lower returns than stocks, but they also have far lower volatility.”

By anticipating your needs in all areas of your retirement, you can simplify what is a daunting process. Make a budget of your spending habits, look into any retirement plans your company offers and talk with a financial advisor about your options. Even with these seemingly small steps, you’ll be on the path to future security.

“Everyone wants to have that dream retirement life,” says Cullinane. “For most of us, when we retire, it’s the first time in our lives when we have the time and money to do the things we always wanted to do. When you’re younger you have the time but not the money. When you’re working, you have the money but not the time. Make sure you plan to have the life you always wanted and you will understand why they call them the golden years.”

Just ask the Cupanis.

Posted: 1/17/08