Next week's "National Save for Retirement Week" will remind Americans to take steps towards a lifetime of financial security by having a well-conceived retirement savings plan.
TIAA-CREF's "Five Ways to Jump Start Your Retirement" are based on TIAA-CREF's 88 years of helping people who work in the academic, research, medical and cultural fields get to and through retirement. TIAA-CREF encourages all Americans to examine these five key elements for a financially secure and satisfying retirement:
1. Start Saving Now
The sooner you begin saving for retirement, the better. An early start gives you several years to build your savings and to potentially benefit from compounding (the earning of interest on interest), or using investment income and gains to produce even more accumulations as they're reinvested.
2. Make a Plan
Create a strategy that makes sense for the goals you want to achieve, understand your time horizon — the number of years you'll be investing before you'll use the money and how many years you need the money to last. Use a financial organizer tool to help you make your plan.
3. Know Your Risk
Your risk tolerance, or ability to handle declines in your portfolio's value, should guide you on the construction of your retirement portfolio. Broadly speaking, if you have a low risk tolerance most financial experts would suggest allocating a smaller percentage of your portfolio to relatively riskier assets, such as equities, and may suggest you emphasize more stable investments, such as guaranteed accounts. At the same time, not taking any risk is a risk itself. You may need to take a certain amount of risk to work toward long-term goals.
Diversify your portfolio by investing in a variety of asset classes including equities, fixed income, real estate, and money markets and also investment types such as individual securities, mutual funds and guaranteed contracts. Diversification, however, does not protect against loss. Most financial experts recommend a broad number of investments within each class instead of relying exclusively on a few securities within a single asset class.
4. Seek Objective Advice
A successful savings strategy starts with personalized, fully independent, objective recommendations so that you can make informed decisions about your retirement portfolio. If you seek financial advice from professionals, ask if they receive commissions and how their compensation may influence their advice to you. Watch our Investment Check Up Seminar.
5. Shop Smart
It's key to be an informed investment shopper. Chasing investment fads, focusing on the short-term, choosing expensive investments and trying to "time the market" can result in costly mistakes which can impede progress toward your long-term goals. You can be an educated investment shopper if you:
Use this Expense/Growth Calculator to help you shop smart.
"Few things in life are more important than saving and planning for retirement," remarked Fran Nolan, TIAA-CREF Executive Vice President of Individual Client Services. "We hope these five elements motivate those who have started saving to think about planning in new ways and encourages those who haven't started to get the ball rolling."
Always important, saving for retirement has become even more so today. Recent studies conducted by the Employee Benefit Research Institute indicate that less than two-thirds of American workers or their spouses are currently saving for retirement, and that the actual amount of retirement savings lags far behind the amount that is needed to adequately fund retirement.
October 22 through October 28 — "National Save for Retirement Week" — employees should take a good look at retirement options available to them with their current employers. Many employees have access to defined benefit or defined contribution plans to assist them in preparing for retirement. Although Social Security remains the bedrock of retirement income, it was never intended to be the sole source of income for United States families.
All workers can benefit from increased awareness of the need to save for retirement and the availability of tax-advantaged retirement savings vehicles to assist them in that effort.
In order to better inform people and help them jumpstart their retirement saving, TIAA-CREF has provided some helpful tools and articles located on our website. Please visit www.tiaa-cref.org for more details. Specific retirement tips can be found at:
Make a Plan
Tip: Don't forget about short-term goals
Know Your Risk
Tip: Think about allocation and income
Seek Advice
Tip: Review your retirement strategies (PDF)
Shop Smart
Tip: Read investing today (PDF)
About TIAA-CREF
TIAA-CREF is a national financial services organization with more than $390 billion in combined assets under management (9/30/06) and the leading provider of retirement services in the academic, research, medical and cultural fields.
TIAA-CREF Individual & Institutional Services, LLC, and Teachers Personal Investors Services, Inc., distribute securities products. You should consider the investment objectives, risks, charges and expenses carefully before investing. Please go to http://www.tiaa-cref.org/index.html for a prospectus that contains this and other information. Please read the prospectus carefully before investing.
TIAA-CREF Individual & Institutional Services, LLC, and Teachers Personal Investors Services, Inc., distribute securities products. TIAA (Teachers Insurance and Annuity Association), New York, NY and TIAA-CREF Life Insurance Co., New York, NY issue insurance and annuities.
© 2008 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017
