Start Early – The earlier in your career you start saving the less you will have to save every month and year to reach your retirement goal. This is known as the power of compounding interest. Example if you save $5,000 a year for 20 years at an 8% return you will have saved approximately $250,000 for retirement, conversely, if you saved $10,000 a year for 10 years at 8% return you would have approximately $155,000 saved for retirement.
Use all the Retirement Tools Available to You – Use all the tools at your access and maximize contribution to your retirement plan. If you cannot afford to make the maximum annual contribution to your retirement plan, at a minimum take advantage of any employer match. Many times, retirement plans will also have financial advisors available to plan participants, take advantage of these offerings. If your plan does not offer any financial planning services, you should seek out the services of a fee only fiduciary financial advisor.
Asset Allocation is the Key to Managing Risk and Investment Returns – Most Investment managers will tell you that the asset allocation is the key to investment returns and managing risk. It is also the key to sticking with your retirement plan in turbulent markets. If your asset allocation is out of line with your personal risk tolerance you are more prone to making poor investment choices when markets are volatile. Sell when market is down.
Understand that retirement savings needs to last 25 years or more in retirement. – As a wealth manger I we consistently see people coming to us for retirement planning and when asked about their personal investment time horizon, they will use their anticipated retirement date. This date is not the end date but rather the start of a new phase of your retirement plan. Your retirement assets still need to last 20+ years and provide cash flow to you and your family.
If you are just setting up retirement investment plan or you think that you may need a course correction from an experienced and impartial fee only fiduciary like Winthrop Partners, contact Brian Werner CFA, CFP for a complementary discussion: 412-281-1470 Brian.Werner@WinthropPartners.com
Brian Werner is a Managing Partner at Winthrop Partners. He has more than 25 years of experience in investments, financial planning, entrepreneurial ventures, corporate finance, and banking. Prior to joining Winthrop Partners, Brian was the First Vice President and a Senior Wealth Advisor for First Niagara, where he led the development of First Niagara’s Western Pennsylvania Private Client Services and served on its western Pennsylvania operating committee. He also held roles with PNC/National City, Greycourt Investment Advisors, and Linnco Future Group, Chicago Board of Trade. Brian is a Chartered Financial Analyst and Certified Financial Planner. He earned his MBA from Duquesne University, Magna Cum Laude.