Step 9 of 10 Steps to Financial Wellness
You’re now ready to start saving—and growing that savings—for a comfortable retirement.
And the longer you allow your savings to grow, the bigger your nest egg will be when it’s time to cash in on your funds. In other words, the earlier you can start saving, the better.
For step 9 of your financial wellness journey, here are a few steps to help get your retirement plan on solid footing.
Set a target number
Before you start putting away money, determine how much you’ll need to live comfortably and independently throughout retirement. Be sure to factor in the style of life you wish to live in retirement. Plan to travel the world? Will your house be paid off? Our retirement calculator can help give you an idea of how much you might need.
Choose your accounts
Next, select a place to store your retirement savings. There are many options, some of which you may already have. Here’s a quick review of the two most common retirement accounts:
- 401(k). You may already have a 401(k) through your employer. Take advantage of this retirement tool by maximizing your contributions. Additionally, many employers will match a portion, or all, of your contributions, which is free money that will help your investments grow, tax-deferred.
- IRA. An individual retirement account (IRA) is a fund that lets your money grow tax-deferred. The two most common types are traditional IRAs and Roth IRAs. A traditional IRA lets your money grow tax-deferred, but withdrawals are taxable. Conversely, a Roth IRA does not feature tax-deferred growth, but qualified withdrawals are not taxed.
Establish an investing style
Whether you plan to actively manage your investments or have a financial advisor or broker handle them for you, find an investing style that suits your personality and investing goals.
- DIY. If you’re confident in your knowledge of the market and savvy enough to make your own investing decisions, actively managing your account may be the best choice. However, this option is generally not recommended for new investors.
- Broker. Full-service brokers charge a higher fee but will manage every aspect of your investments, including estate planning, retirement planning, financial advice, and more. Discount brokers will have lower fees but offer fewer services.
- Financial advisor. A financial advisor will make investment decisions, monitor your portfolio, and make changes as deemed necessary according to your risk tolerance.
- Robo-advisor. This automated option typically costs less than a traditional broker and works with your goals, risk tolerance level, and other personal details. However, you’re less likely to have access to human advisors if needed, and your investment options may be limited.
Once you’ve established your retirement accounts, you’ll want to diversify your portfolio by investing in stocks, bonds, exchange-traded funds (ETFs), or mutual funds. An experienced CFS Financial Advisor at SELCO Investment & Retirement Services* can help you decide the best way to reach your goals.
Final step: Review and Tweak
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*Nondeposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Nondeposit investment products offered through CFS are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. SELCO Community Credit Union has contracted with CFS to make nondeposit investment products and services available to credit union members.
