e-book Seven Rules of Retirement Investment

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Savings rates would have to be extraordinarily high in order to reach the target asset accumulation needed to achieve retirement security. Then there are the investors who follow the herd and jump in as the market is going up, investing in hot sectors on a whim, often taking on more risk than they might otherwise. When the market is going up, they take on too much risk for their investment profile.

Similarly, there are savers who manage to sock away money, but never come up with an investing plan.

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Determine the right asset allocation for your portfolio and stick with it until you get close to retirement. As you get close to retirement, the asset allocation of your portfolio should shift to a more conservative stance. Ideally, people begin to transition their portfolio into retirement mode years before they actually retire. As retirement nears, the mix of investments needs to change, moving from capital appreciation toward capital preservation during the distribution phase.

Investors should rebalance their portfolio to make sure their risk tolerance matches their age and timeline to retirement. That usually means scaling back equity exposure and increasing the amount of bonds in the portfolio. Of course, some exposure to stocks is warranted since retirement can last 30 or more years.

Baby Step 6: Pay Off Your Home Early

Once you have amassed a handsome sum, it may be difficult to relinquish a portion of it to create a stream of income. Experts often recommend getting a life annuity. Very basically, immediate annuities are insurance against outliving your money. You give the insurance company a lump sum, and they agree to give you a certain amount at regular intervals until you die. The alternatives to annuities — living off of interest and dividends or using the 4 percent rule for withdrawals — can leave retirees subject to market whims or pursuing investment strategies based on their need for income instead of a prudent approach that optimally balances risk and reward.

Calculate your withdrawal rate

Since no one knows how long they will live, this strategy takes some of the guesswork out of retirement. Begin slideshow. The Bankrate Daily Sign up to receive the best of Bankrate delivered to your inbox every weekday. Become a Member. Sign In.

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Already a member? Welcome to Consumer Reports. You now have access to benefits that can help you choose right, be safe and stay informed. Get Started. Planning for a Secure Retirement. Whether you're in your 50s, 60s, or 70s, these savvy steps can help you live comfortably after you stop working.

By Penelope Wang. Last updated: February 08, Sharing is Nice Yes, send me a copy of this email. Send We respect your privacy. Oops, we messed up. Try again later.

How much do you need to save for retirement?

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How to Afford Healthcare During Retirement. More From Consumer Reports. Retirement Planning Guide. Working and Saving: 50 to Early 60s On average, men claim retirement benefits at age Easing Into Retirement: 60 to Early 70s As you close in on your retirement date, you have less time to recover from a financial setback. Penelope Wang I cover everything from retirement planning to taxes to college saving. Show comments commenting powered by Facebook. Make a Donation Newsletters Give a Gift.

Here's how much income various-sized nest eggs will generate in year one:.

7 Retirement Rules to Live By

How should you invest your dollars? Index funds have tended to outperform managed stock mutual funds over long periods, so don't allow yourself to be enticed by a sweet-talking mutual fund pusher. Planning for retirement and living well in it might seem to be largely about money -- saving enough, keeping it allocated properly, spending the right amount, and not running out of money. Those are indeed important considerations, but there are other important components of retirement -- such as your health, both physical and mental.

So plan to stay active and social in retirement, too. Think about getting a part-time job, a side hustle, joining a club, or taking up a new hobby. It's not a bad idea to start looking into possibilities well before you retire. Speaking of health, don't forget to factor healthcare costs into your planning. These are annual deadlines, so set yourself a reminder on the calendar each year so you never forget.

If you're thinking that once you approach or enter retirement, you'll need to sell all your stocks and buy bonds or just move that money into CDs, think again. Yes, it can make sense to keep a portion of your retirement war chest in a "safer" place than the stock market. But remember, for funds you won't need for at least five or ten years, the stock market is one of the best ways to grow that money.