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Young people: take a new investing approach to retirement planning

Jim Poolman Executive Director Indexed Annuity Leadership Council

There has been a lot of information swirling around in the news about social security, pensions, and “myRA.” It may make it hard to determine what you need to do to save for your retirement. The landscape of retirement is changing, and the way young professionals will need to save for retirement will be drastically different than the way baby boomers and older generations have saved. Below is some advice on how to save in this new age of retirement.


Do

Do take advantage of employee retirement plans

If your employer offers a retirement benefits package, be sure to contribute what you can—especially if your employer gives matching contributions. Remember these are pre-tax dollars that will be of much more value in a 401(k) vs. your checking account.

Do diversify your investments

Some people are aggressive investors and others are low-risk. Sometimes—being younger—a financial professional might recommend being a little more aggressive with your retirement investments because you have a little more time to bounce back from dips. In any event, be sure that your retirement portfolio is balanced with low-risk products, like a fixed indexed annuity, to ensure you always have a piece of your retirement safeguarded.

Do use calculators to plan your retirement

Do not save arbitrarily. Use retirement calculators to help properly plan for the resources you will need to lead the lifestyle you want at retirement.

Do save outside of your employer plan

Try to have retirement savings outside of your employer’s plan. Even investing small amounts per month in an insurance product like an annuity, which can provide lifetime income at retirement, or an investment product will help add to your retirement income immensely in the long run.

Do pay attention to your retirement accounts

The statements you receive in the mail regarding your retirement savings accounts—read them! And, if you don’t understand what you’re reading, ask a financial advisor. Those statements are offering information about your money and your future; make sure to stay on top of what’s going on.


Don't

Do not rely on social security

If you have been watching the news, you might notice the landscape of retirement is shifting, and social security is becoming increasingly less reliable. Do not depend on social security or any other government-funded retirement income because, while it might be here today, it could easily be gone tomorrow.

Do not wait to save

Start saving now. Every day missed will cost you a lot of money over time. If you don’t feel like you have a lot of extra money you can save right now, still save—and save it, first. As Warren Buffett once said: Pay yourself first… “Don't save what is left after spending; spend what is left after saving.”

Do not put your eggs in one basket

It’s important to diversify your retirement plan by using different products and resources. This may include annuities, mutual funds, stocks and/or other tools.

Do not plan for retirement alone

There are qualified insurance agents, investment, and financial advisors out there to help you through the process and advise you on the appropriate decisions. Tap into these expert resources as you plan your retirement portfolio.

Do not think short term

As a young professional, retirement planning is a very long-term investment plan. Every decision you make should not be based on the here and now, but rather the future. Moreover, don’t make rash investment decisions based on the current state of the market. Again, look at things long term.


Summary
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The retirement landscape is shifting, and it’s important to understand what you need to do to ensure your retirement savings is secured. Use these tips to protect your future.


More expert advice about Retirement Planning

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Jim PoolmanExecutive Director

Poolman has an independent regulatory consulting practice, where he advises insurance companies and producer clients on regulatory issues, and works with regulators on their behalf. Previously, Poolman was the North Dakota Insurance Commissioner...

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