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Investing for Retirement

3 Ways to Start Investing Toward Retirement

As you start your investment journey and begin saving for retirement, sound investment planning is crucial. Thanks to advances in public health, nutrition and wellness-oriented lifestyles, the average life expectancy today has stretched to more than 78 years, according to the Centers for Disease Control¹.

Combine that with the uncertainty of retirement wildcards, such as Social Security benefits and cost of healthcare and it’s clear that the longer investors live in retirement, the more money they will need. But it also is true investors may have more time to accumulate assets for later years. Here you’ll find three ways to jump start your investing toward retirement and begin your path to accumulation.

1. Take advantage of IRAs.

An IRA is a flexible, tax-deferred way to invest for retirement. Earnings are tax-deferred and contributions may be fully or partially tax-deductible. Janus Henderson offers both Traditional IRAs and Roth IRAs. See below for some of the key differences that can help you determine which may be the right fit for you.

A traditional IRA might be a good option for an investor that:

• Believes that their tax rate will decrease over the long term
• Wants the tax benefit each year of deducting contributions from their income
• Make more than $135,000 (2018) or $137,000 (2019) per year if single or $199,000 (2018) or $203,000 (2019) if married
• Wants to roll over a traditional 401(k) or workplace retirement plan

A Roth IRA might be a good option for an investor that:

• Believes their tax rate will rise over the long-term
• Is contributing to a workplace retirement plan and also wants to contribute to an IRA
• Wants potential for earnings to grow tax-free
• Wants tax-free distributions during retirement
• Make less than $135,000 (2018) or $137,000 (2019) per year if single or $199,000 (2018) or $203,000 (2019) if married

2. Start early and stay focused.

The power of compounding may help your money grow dramatically in tax-advantaged retirement accounts. Give it a boost by paying yourself first and potentially adding an extra 10 to 20 years to your savings. As an investor, a long-term focus gives your investments the opportunity to seek the positive returns they’re designed to pursue.

For as little as $50 per month, establishing an automatic investment plan is an easy way to accomplish this while also ensuring that you prioritize your retirement savings.

3. Choose your investment wisely.

While you can’t eliminate risk, you can certainly work to manage it. And it starts with setting expectations. The more risk you are willing to take, the greater potential for reward. However, it also pays to consider how much risk you can handle on the downside, because at some point you will likely experience negative returns or even financial hardship. Consider the market volatility of 2008 and 2009 or the many workers who found themselves underemployed during the last economic recession.

Knowing your risk tolerance and understanding your investments can help you be more inclined to stay the course when times get tough. Also be wary of being too conservative. Investing too conservatively may put you at a greater risk of inflation, eroding the buying power of your money, or possibly causing you to work longer into your retirement years. Aim to invest as aggressively as your risk tolerance will allow and make investments that fit your risk profile.

Get started.

Check out our retirement resources in the Janus Henderson Retirement Planning section or call a Janus Henderson Retirement Specialist at 800.525.1093.

1. Source: Source: https://www.cdc.gov/nchs/fastats/life-expectancy/htm (2015)