Investment Strategies

Saving for retirement can feel overwhelming, but the best plan is usually one you start, even in small steps. Here is a practical path for getting going.

Step 1: Picture what you will need

Think about when you want to stop working, where you want to live, and what lifestyle you want. A common approach is to estimate that you will need a substantial portion of your current income each year, adjusted for expenses that will drop (commuting, perhaps a mortgage) and those that may rise (health care). Then subtract expected Social Security and any pension to estimate what your savings must provide. Online calculators can help, and so can a conversation with us.

Step 2: Take free money first

If your employer offers a 401(k) or similar plan with matching contributions, contribute at least enough to receive the full match. The match is effectively an immediate return on your money.

Step 3: Choose the right accounts

• Employer plans (401(k), 403(b), 457): contributions come out of pay, often before tax, and many plans offer a Roth option.
• Traditional IRA: contributions may be deductible depending on your income and whether you are covered by a workplace plan.
• Roth IRA: contributions are not deductible, but qualified withdrawals are tax-free. Income limits apply.
• Self-employed options: SEP IRAs, SIMPLE IRAs and solo 401(k)s let owners put away more.

The IRS sets the annual contribution limits and eligibility rules, and they change. See irs.gov or ask us for the current figures.

Step 4: Pick sensible investments

Match your investments to your time horizon and tolerance for risk. A diversified mix of stocks and bonds is typical, with a shift toward safer holdings as retirement nears. Target-date funds do this adjustment automatically. Keep an eye on fees, because they compound against you over decades.

Step 5: Automate and increase

Set up automatic contributions so saving happens without effort. Raise your rate each time you get a raise. Even small, steady increases make a significant difference over time.

Step 6: Review yearly

Check your progress, rebalance if your mix has drifted, and update your beneficiary designations. Revisit your plan after major life events.

Common mistakes to avoid

• Waiting for the "right time" to begin.
• Cashing out an employer plan when changing jobs rather than rolling it over.
• Borrowing from your retirement account without understanding the consequences.
• Investing too conservatively or too aggressively out of fear or excitement.

If you are not sure where to begin, our tax planning services can help you choose the accounts that fit your situation, or you can contact us to set up a meeting.