Shawn Wall, Edward Jones We all want to enjoy a comfortable retirement. But to do so, we need to make different moves, and consider different issues, at different times of our lives.

To help illustrate this point, let’s look at three individuals: Alice, who is just starting out in her career, Bob, who is nearing retirement, and Charlie, who has recently retired.
Let’s start with Alice. As a young worker, Alice has a good four decades ahead of her until she retires. Yet she realizes that it’s never too soon to start saving for retirement, so she has already begun contributing to her 401(k) and to an IRA. And since she has so much time ahead of her, she can afford to invest aggressively, putting much of her contributions in growth-oriented vehicles. While it’s true that the market will certainly have its “dips” in the future, and that Alice’s account values could rise and fall from year to year, it’s also true that, over the long term, stocks have historically trended upward*. And the longer Alice holds her investments, the less of an impact that market extremes should have on her 401(k), IRA and other accounts.

Now, let’s turn our attention to Bob. Since he is within a few years of retirement, he has some key decisions to make. For one thing, he must decide if it’s time to change the investment mix in his IRA, 401(k) and other accounts. Because Bob doesn’t have much time to overcome market volatility, and since he’d like to maintain the gains he has already achieved, he may decide to become more conservative with his investments. Consequently, he may choose to move some of his investment dollars from stocks to bonds and other fixed-income securities. Realizing, however, that he may spend two or three decades in retirement, and knowing that he will need to stay ahead of inflation, he doesn’t abandon all his growth-oriented investments. Furthermore, Bob decides that he may need to bolster his retirement income, so he considers whether an annuity, which is designed to provide him with an income stream he can’t out-live is appropriate for his situation.
Our final “life stages” investor is Charlie. He has recently retired, so his biggest concern is making sure he doesn’t outlive his financial resources. Therefore, he may need to consider a variety of moves. For starters, he should determine when to start taking Social Security and when to begin taking withdrawals from his IRA and 401(k) plans. (For a traditional IRA and a 401(k) or other employer-sponsored plan, Charlie, like all investors, must start taking withdrawals no later than age 70-1/2, but for a Roth IRA, there is no age requirement. However, there may be other requirements that must be met for a Roth IRA.) After deciding when to start taking withdrawals from his retirement plans, he’ll also need to calculate how much he can afford to take each year without emptying the accounts. Finally, he might need to rebalance his overall investment portfolio to provide himself with more income.

Of course, the situations described have been simplified for illustrative purposes to give an idea of some of the considerations for different stages in your life. It is important to work with your financial professional to develop a plan to help you enjoy the retirement lifestyle that you’ve envisioned.

*Past performance is no guarantee of future results. An investment in stocks will fluctuate with market conditions and may be worth more or less than the original investment. Before investing in bonds, you should understand the risks involved, including interest rate risk, credit risk and market risk. When interest rates rise the prices of bonds can decrease and the investor may lose principal value if sold prior to maturity.