In the second part of this series, “Investing for the Ages,” I want to focus on people in their forties and fifties. At this point, you should have accumulated forty percent to sixty-five percent of your retirement savings goal. Ok, I’m guessing a lot of people are thinking, “I have no idea what my retirement goal is, much less how much I should have accumulated so far.” You should do a detailed analysis or work with a financial advisor to help you, but let’s do a very rough guestimate. Assume that after taxes and savings/investing, you are spending $5,000 per month on lifestyle, and you plan to retire at sixty-five. If you’re in your early-to-mid forties, you should have $400,000 – $500,000 in retirement savings. If you are in your mid-to-late fifties, your retirement savings should be around $600,000 – $700,000. If you are significantly below the targets, consider hiring a professional advisor to help you map out a plan. You still have time, but time is running out.
If you followed our advice for Investing for the Ages: ’20s & 30’s, you’ve been investing primarily in all stocks. Now’s the time to consider adding some bonds to your portfolio. As a starting point, allocate 6% to bonds (consider a bond ETF such as AGG) and annually increase your bond allocation by one percent so that by the time you’re age sixty, your bond allocation should be around 20%. Continue to invest the balance in a diversified portfolio of stocks or stock mutual funds/ETFs.
Follow The Welch Group every Tuesday morning on WBRC Fox 6 for the Money Tuesday segment.
FOX 6 TALKING POINTS
Investing for the Ages Part II of III: 40’s & 50’s
- Quick Checkup: Are you on track? Based on $5k/mo monthly expenses
- Early-mid forties: $400k – $500k
- Mid-late fifties: $600k – $700k
- Introduce bonds: 6% at age 40; add 1% each year
- Consider AGG (ETF) for your bond allocation
- Get help from a Certified Financial Planner
Stewart H. Welch, III, CFP, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States. He is the author or co-author of six books, including J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaire; and 100 Tips for Creating a Champagne Retirement on a Shoestring Budget.
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by The Welch Group, LLC -“Welch”), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Welch. Please remember that if you are a Welch client, it remains your responsibility to advise Welch, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Welch is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of Welch’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request. Please Note: Welch does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Welch’s web site or blog or incorporated herein, and takes no responsibility