How should I invest my money towards retirement?
I have a 5 year IRA that is coming to an end. I have about $100,000, but I am not sure if I trust the market to put it anywhere at this time. I am 56 years old and I know I have to invest to be better prepared for retirement. Do you have any ideas or positive moves that may be helpful to me?
Most people think investment along can decide their retirement readiness. That’s further away from the truth. You’re 56, which means you still have 10 or more years to use an IRA to save for your retirement as long as you have an earned income. Maybe this little math will help illustrate. If you put $6,500 for the IRA in addition to your existing $100k balance, for another 14 years (until you’re 70), with even a modest 5% return, you would have $325,384 balance.
I understand you’re hesitation as the recent market reaches to a new high, but without taking a measured risk, your savings will not be able to outlast your living. Furthermore, depending on which IRA (Roth or traditional) you have used for savings, it will make a tremendous difference later when you claim the social security benefits as up to 85% benefits may be subject to tax.
This is a time to talk to a professional, CFP® or RICP® to tap his/her expertise to better plan for you. Best!
Traditionally and recently, the market has moved up and down, but over the long haul the market has been positive. At 56 years old, I assume you would like to have some more conservative investments that will be less likely to put your nest egg at risk, although there is always risk in the market. It is important to determine your risk tolerance, your investment objectives, and your time frame for needing the money. Then either talk to an investment advisor for help or research some conservative investments like index funds/ETF’s that meet your criteria. If you want to try the market out, invest a little at a time, evaluate, adjust, and invest again. Think long-term, don’t expect immediate results, and keep your eye on the fundamentals of your investments.
I am not quite sure what you mean by a 5 year IRA, but I am going to assume you have an IRA at your bank, and it has a 5 year CD in it. Also, I completely understand your hesitation with the market, however, most retirement investing involves some allocation to stocks.
Your best move would be to seek out an advisor in your area that can help you answer the important questions about retirement planning. Then you can make a wise decision about how much to invest in the market. Here are a couple of links that can help you find a qualified local advisor.
Hope that helps.
Wyatt A. Moerdyk, AIF®
Managing Member/Chief Compliance Officer
Accredited Investment Fiduciary®
Evidence Advisors Investment Management
Investment Advisory Services offered through Evidence Advisors, LLC, a registered investment advisor. Investopedia, LLC and Evidence Advisors, LLC are not affiliated.
Great question! I would start by having some comprehensive planning work done. It's really not prudent to make investing decisions in a vacuum. If you had a big picture view, incorporating any other outside income, social security estimates, and learning what your risk tolerance is, then you can make a better decision. If you know how much income you need to make in order to live the lifestyle you wish to live, and you know how much you can expect each year from other sources, it will help you to make a more educated decision on how to invest that money.
Hope this helps!
Hi, it sounds as if this IRA may be in a CD that is coming due. Depending on whether this is your only retirement and investment asset would determine how it should be invested.
Yes, there is risk to principal when one invests in stocks or bonds, however, there is also risk pertaining to purchasing power. 56 years old is still young in my book and you may be around for quite awhile. 30 years from now, pretty much everything will cost more so having a proper long term investment plan is critical.
I suggest seeking out the guidance of a fee based Certified Financial Planner practitioner. http://www.plannersearch.org/