The number of years you have before retirement could be the most important factor when planning how to invest your retirement money.
Plan for the unexpected
No one can predict the future, but you can be well-prepared.
For example, if you’re forced to retire early, you’ll lose time you were counting on to build up your retirement savings.
It’s smart to save a little more and spend a little less when you’re planning for contingencies. The extra cushion will come in handy if you do suffer any setbacks.
Time until retirement
In general, the more time you have to invest, the more risk you can afford to take. If you have many years until retirement, you may want to choose investments that have the potential to provide high growth, such as stocks. If the value of your investments falls, you may still have time to recover. If you’re close to retirement, you may want to have more conservative investments, such as bonds. That way, there’s a greater probability that your money will be there when you retire.
Don’t forget post-retirement time
When working on your financial planning, don’t overlook the time you’ll spend in retirement.
On average, a 65-year-old can expect to live for about 20 more years. And many people will enjoy even longer lives.
Be careful not to invest too conservatively, because you may need money for a long time after you stop working. Most people need some investment growth even after retirement.