Which retire guide

Lots of people have financial goals they feel are more pressing, such as paying down credit card or student loan debt or building up an emergency fund. Generally, you should aim to save for retirement at the same time you're building your emergency fund — especially if you have an employer retirement plan that matches any portion of your contributions.

A cornerstone of retirement planning is determining not only how much to save, but also where to save it. If you have a k or other employer retirement plan with matching dollars, consider starting there. There is no single best retirement plan, but there is likely a best retirement plan — or combination of retirement accounts — for you.

In general, the best plans provide tax advantages, and, if available, an additional savings incentive, such as matching contributions. That's why, in many cases, a k with an employer match is the best place to start for many people. This is a plan you open yourself at an online broker or other account provider. An IRA is hardly a consolation prize. Here are seven types of retirement plans that might work for you. Click the links to read more about how each one works.

Roth IRA. Traditional IRA. Self-directed IRA. Simple IRA. Solo k. The main drawbacks are fees and flexibility.

Because someone else is doing the stock picking, fees are higher on actively managed mutual funds than on other kinds of investment vehicles. You also can't buy or sell them during the day as they're only priced after the market closes. Index funds are similar to active mutual funds, except there's no stock picker.

One of the issues with traditional mutual funds is that most don't beat their benchmarks especially when you factor in the higher fees. Index funds were developed to avoid underperformance — returns are the same as the index they follow. There is a management fee, but it's a lot less than what you might find on a traditional mutual fund.

Like active mutual funds, you can't sell them during the day and they only get prices after the trading day is over. ETFs are like traditional mutual funds in that they hold a basket of securities, like stocks or bonds, and they're like index funds in that many track a benchmark.

They're different, though, in that they trade on a stock exchange, which means they're priced in real-time and can be bought and sold at any point during the day. That's less important for retirement investors who hold stocks for the long-term, but still, you never know when you might need to sell something.

Most importantly, index ETFs are cheap. Many come with no management expense fees, while others have fees between 2 basis points and 10 basis points 0. That's why they have seen their popularity soar — as you'll see later on, the more you can save on fees, the more money you can put towards your retirement.

One of the most popular k investments these days are target date funds, which are a class of all-in-one mutual funds or ETFs that adjust their asset class mix automatically as you age. By becoming more conservative, there's less of a chance of losing money in the market in the few years leading up to retirement. In many employer-sponsored retirement plans, target date funds are now the default investment choice if investors don't actively make investment selections.

A lot of people like investing on their own, but when it comes to retirement savings it's a good idea to work with a financial advisor who has a certified financial planning designation.

Here are a few things to look for in a good advisor. One of the first conversations you'll have with an advisor is around your time horizon and risk tolerance levels, which are two key things to consider when building a portfolio.

Most advisors tell their clients to get more conservative as they get older because there's less time to recover from a drop. This is a rule of thumb, though many people reach retirement with a big nest egg and still can keep a good portion of their assets in stocks. Just make sure that any money you need for day-to-day living is not subject to market ups and downs. It's important to assess fund management and trading fees since they can eat into profits.

Even do-it-yourself investors typically have to pay commissions on some trades. If you pay 0. That's a big difference. Fees on active funds have come down due to the pressure from index funds and ETFs. According to the Investment Company Institute, the average equity mutual fund fee is now roughly 0.

But most index ETFs and index mutual funds remain cheaper — a few ETFs even launched in recent years with no fees at all. There's a major movement towards lower-fee investments, in general, even if not zero-fee, so expect more funds to drop their prices in the coming years, and some active mutual fund companies are starting to launch their own active ETFs as well.

While your investment portfolio is a big part of the net worth equation — which you can calculate by adding up the value of your assets and subtracting your debt — it's not the only thing that can potentially contribute to your financial well-being in retirement. Here are five ways to increase your net worth.

Depending on where you live and when you purchased your abode, a house can end up being your most valuable asset and a lot of people do sell their home later in life and then use that money to help fund their retirement goals. Real estate can be a great asset because it tends to rise in value over time — though as we saw during the Great Recession, that's not a guarantee by any means.

While renting can be cheaper, and you can then invest the difference and potentially earn more over time than you would on a house, real estate essentially forces you to save. As you pay down your mortgage, and as the value of your property rises, your net will increase. A business can add a lot of value to someone's net worth — or not. While many businesses do provide a decent living for their owner, they're an illiquid asset, often hard to value that takes time to sell.

Putting a price on a business is a lot harder than coming up with a sale price for a home, though, so talk to an expert who can help you set a valuation and determine how much your operation may net. Most people want to earn increasingly larger amounts over their lifetime. The more money you have the more you can save, put toward debt, use on buying other assets and more.

Decreasing debt increases your net worth, so, over time, do what you can to pay down your mortgage, pay off your car loan and reduce any credit card debt.

At the same time, consider cutting back on some of your expenses. The lower your expenses the more you're worth — and the more you can save.

This is a little different than the rest, but your family's net worth will, of course, drop significantly if you unexpectedly pass away and can't earn a living anymore. To protect them, consider buying life insurance. It won't help you in retirement though, some kinds do come with an investment component that you can tap into later in life but it will help your spouse and children stay afloat if something goes awry. Life does not move in a straight line, which means everything from your net worth to your investments to your retirement plan will likely experience a setback at some point.

You could lose a job, the market could crash, you could face a health-care crisis and more. The key with all of this is to not panic and stick to your plan. Of course, that's easier said than done, especially when it comes to the stock market. While that's a normal reaction, selling out may be the worst thing you can do since you can miss out on recouping those losses if there is an upswing.

Few investors can successfully time the market. If you sold out and and haven't bought back in yet, you would have lost a lot of money instead of being up on the year. So, while there are down years, the market is up more than it's not. When the market does fall, don't panic. Keep contributing your monthly amount — while you may lose some of it as the market falls, you'll also end up buying stocks at the bottom, which will increase in value significantly as stocks rise — and, if you lose your job or are worried about an income reduction, review your budget to see where you can cut back.

Medicare FAQ. Life Insurance View Subpages. Types of Life Insurance. How Much Do I Need? Life Insurance FAQ. Annuities View Subpages. Types of Annuities.

Fixed Indexed. Payout Options. Buying an Annuity. Companies and Providers. Annuity FAQ. Retirement Planning View Subpages. Retirement Accounts. As part of our Retirement Insights program, the Guide to Retirement serves as a valuable source of information on retirement topics and provides a strong backdrop for planning discussions. It includes charts and graphs to help you explain complex topics in a clear and concise manner.

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