Ensure you'll have a financially secure retirement

the retirement marathon

investing for retirement is a long-term pursuit of financial security.

In 1900, retirement wasn’t a hot topic. Employers didn’t offer pensions, there was no Social Security, and the average life expectancy was 50.

More than a century later, everything’s changed. More than 44 million people collect retirement benefits, and that number is expected to reach 72 million by 2030. And people are living much longer: current estimates suggest that a million or more people now in their 40s can expect to live to be 100 or more.

What The Future Holds

The 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. Other people work productively through their 90s, 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 do 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, planning for the future has three main ingredients:

• Your financial security

• Adequate healthcare

• Benefits for your heirs

personal investing goals

chances are, living the life you want after you retire will depend on your investment income.

When you invest, you use your principal, or money you already have, to produce additional income that will help you achieve a variety of financial goals that are important to you.

When one of your goals is providing for a secure long-term retirement, there’s no fixed point when you need the money, as there is when you buy a house or pay college tuition. Rather, you need to plan for a continuous process that evolves through three distinct phases:

• Building the value of your portfolio

• Producing income

• Preserving your principle

A Three-Stage Plan

The challenge is that each phase of meeting your goals requires a different mindset. Accumulating assets that will increase in value requires some risk-taking, including being prepared to ride out market downturns. Converting from growth to income production requires evaluating which investments to sell off and where to put the money for the most reliable return. Preserving principle for 20 or 30 years while it produces the income you need to live on may be the most difficult of all. It requires regularly adjusting what you spend as your investment return varies.

Seeking Growth

Growth is the first order of business, and investments may grow in many ways.

• You can add to your principal on a regular basis by contributing a percentage of your income to your investment account or contributing the maximum to an IRA.

• You can reinvest your investment earnings rather than spend them, either by using an official plan offered by a mutual fund or stock reinvestment program, or by putting all your interest and dividend payments into a special investment account.

• You can invest in equity products like stocks, ETFs, and stock funds, though growth isn’t guaranteed, and they could also lose value in a weak or falling market.

• You can allocate your assets across asset classes to help reduce your exposure to recurring market and interest-rate risk.

• You can diversify your portfolio within asset classes to help reduce the risk of being too narrowly focuesed, though diversification doesn’t guarantee a return or protect you against losses in a falling market.