If you want your nest egg to be robust when you’re ready to retire, you have to take care of it now. That means careful investing and saving. You can’t just go out there and wing it.
Here are five things to consider as you build and manage your wealth.
1. Reduce your risk.
If you lose 10% of your savings when you’re young — say, $1,000 of your $10,000 — it’s a blow. If you lose 10% of the $1 million you have saved for retirement at 65, it will feel like a knockout punch. Know your time horizon and how much risk you can tolerate. Your portfolio will thank you.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
2. Build a solid foundation.
Make sure your retirement’s financial needs are covered and locked in years before you actually call it quits. Set a practical budget and work with your financial professional to draw up a plan that includes a structured way of drawing income from certain assets, implementing cash flow on others, dealing with inflation and taxes, and taking asset protection into consideration in case you or your spouse need long-term care.
3. Hedge risk through diversification.
There's an old joke that underscores the risks of investing: “How do you make $1 million in the market? Start with $2 million.” It’s OK to take some risk, but hedge the downside so you don’t lose everything. Don’t go all in on any one investment or asset class; keep a diversified portfolio. Talk to your financial professional about risk-management options.
4. Have realistic expectations.
You don’t retire wealthy by making huge returns — you do so by saving your money and avoiding costly mistakes. Slowly and strategically shift your focus from accumulation to preservation as you draw closer to retirement. Conservative investments aren’t as exciting as hot stocks, and you can’t brag about them at the club, but when your portfolio is secure, it can help you have more confidence in your financial future. If you need an occasional thrill, you could always pop into the local convenience store and buy a lottery ticket — but only occasionally.
5. Leverage those who know more.
If you wouldn’t set your own broken arm or defend yourself in court, don’t imagine you’re an expert in retirement planning. Consult with people who have experience in taxes, estate planning and other areas of financial advice. They can help you, and hopefully, you will make fewer mistakes and have a much better chance of hanging on to your wealth.
To end your working years with the kind of wealth that will give you a comfortable, confident retirement, you’ll need a strategy. You’ll need discipline. And you’ll need help.
A trusted financial professional can help keep you on track as you set your goals, build your fortune and then, at long last, enjoy it.
Kim Franke-Folstad contributed to this article.
Investment advisory services offered through AE Wealth Management, LLC (AEWM). AEWM and Max Wealth & Insurance Solutions are not affiliated entities. Investing involves risk including the potential loss of principal.
-
The $33,000 Retirement: One Man's Surprising Path to Financial Freedom at 61Forget what society tells you, even with less than $1 million, you can be happy in retirement.
-
The Best Aerospace and Defense ETFs to BuyThe best aerospace and defense ETFs can help investors capitalize on higher government defense spending or hedge against the potential of a large-scale conflict.
-
Roth IRA Conversions in the Summer? Why Now May Be the Sweet SpotConverting now would enable you to spread a possible tax hit over more than one payment while reducing future taxes.
-
A Financial Expert's Three Steps to Becoming Debt-Free (Even in This Economy)If debt has you spiraling, now is the time to take a few common-sense steps to help knock it down and get it under control.
-
I'm an Insurance Expert: This Is How Your Insurance Protects You While You're on VacationHere are three key things to consider about your insurance (auto, property and health) when traveling within the U.S., including coverage for rental cars, personal belongings and medical emergencies.
-
Investing Professionals Agree: Discipline Beats Drama Right NowBig portfolio adjustments can do more harm than good. Financial experts suggest making thoughtful, strategic moves that fit your long-term goals.
-
'Doing Something' Because of Volatility Can Hurt You: Portfolio Manager Recommends Doing This InsteadYes, it's hard, but if you tune out the siren song of high-flying sectors, resist acting on impulse and focus on your goals, you and your portfolio could be much better off.
-
Social Security's First Beneficiary Lived to Be 100: Will You?Ida May Fuller, Social Security's first beneficiary, retired in 1939 and died in 1975. Today, we should all be planning for a retirement that's as long as Ida's.
-
An Investment Strategist Demystifies Direct Indexing: Is It for You?You've heard of mutual funds and ETFs, but direct indexing may be a new concept ... one that could offer greater flexibility and possible tax savings.
-
Q2 2025 Post-Mortem: Rebound, Risks and Generational ShiftsAs the third quarter gets underway, here are some takeaways from the market's second-quarter performance to consider as you make investment decisions.
