Retirement planning is a subject full of irony: the younger you are when you start investing for it, the more likely it is that you’ll retire with plenty. But when we’re young, we tend to care the least about retirement. Most people under 40 years old don’t even think much about it. Life has more urgent priorities than thinking about how to slow down.
But after 50 years old, we start waking up at night worrying, “Will I ever be able to stop working one day?” Taking action without the benefit of 20-30 years of time on your side is like swearing off steaks as you’re being wheeled into the operating room for a triple bypass: too little, too late.
Since April 15th was the deadline for making yearly IRA contribution, the finance writers were dolling out plenty of advice and ideas on retirement. Neil Weinberg of Forbes guides us how to figure out one’s asset allocation in his article Asset Allocation -The Key to Building A Big Nest Egg. His advice is very useful and his guidelines are similar to how MarketRiders online portfolio manager software works. Other articles worth reading are found in the Wall Street Journal and the Washington Post, they both feature articles on ways to figure out how much you’ll need to retire.
Saving is the first step. Smart investing is the second. A recent MarketRiders study on how fees can devastate an IRA portfolio has been generating a lot of interest. The study reviews three scenarios showing how a 35 year old can diligently contribute $4000 per year to his IRA, but end up losing $1 – $1.5 million over 40 years, just because of fees.
After you read this week’s articles, please fund your IRA this year. You’ll be glad you did!