Tips to Structuring your Retirement Portfolio

Structuring a solid retirement portfolio, like Rome, isn’t built in a day. It takes years of steady savings, intelligent investments and, in these days of an uncertain economy, a good measure of common sense. Of course, a bit of good luck can be helpful, too.

Whether you’re decades or short years away from retirement date, some sensible tips may help you put together a substantial retirement portfolio that will enable you enjoy your sunset years without money worries.

1. Start your retirement portfolio as early as possible. The most favorable time is when you’re beginning what you intend to be a long-term job, such as in industry, government, the military or teaching.

If you’re salaried, the simplest way to save is through regular payroll deductions. Start with a small amount you can afford, and save it in an interest-bearing account, preferably a tax-favorable 401(k) or similar plan. Then, as your career and salary improve, increase the amount per payroll deduction. Within a short time, you’ll become accustomed to the reduced amount in your paycheck and adjust your spending to it. 

2. Consider conservative, low-risk investments beyond maintaining bank savings accounts . To be safe, you can go through your entire career without risking any of your payroll-deduction retirement portfolio. However, by leaving it in saving accounts, low-interest money market accounts or bonds, it won’t grow more than one or two percent beyond the amount of your own money you contribute.

The plus side is that you’ll sleep better at night knowing none of your money is at risk. You must also understand that if inflation continues at the same rate as the interest you’re earning, when you retire, your money will be worth that much less in spending power. 

On the other hand, putting money into stocks and bonds may bring higher growth. Of course, that kind of investment is a gamble and involves risks. If the economy goes bad or the specific company stocks you buy lose value, it will cut into your own portfolio money.

3. Your financial education should be a never-ending course of study. Whether you’re just starting your career or approaching retirement, keep up with all factors that relate to your investments. Continue seeking better interest rates, new and more sensible investments and other opportunities to build your portfolio.

4. Seek help from professionals. If your workplace human reources staff or unit command offers investment counseling, seek regular discussions and advice about the progress of your retirement portfolio.

If your company has a dollar-for-dollar matching contribution program to payroll savings, enroll for the maximum. If it provides choices of fixed interest and stock investment, consider diversifying your portfolio.

5. Decide how much risk you’re willing to take in building your retirement portfolio. Younger people traditionally are more willing to look for high-risk opportunities, because they offer higher and quicker growth. The way to answer that urge is to diversify. If you’re early in your career, earmark a small percentage of your portfolio for the higher-risk investments.

In the decade before your retirement, you may be wise to put all your money into no-risk, interest-bearing accounts. This is critical when you must make certain that your post-retirement income, based on pension, Social Security and investment returns, will be adequate for you to continue a comfortable lifestyle.

Building your retirement portfolio should begin as soon as you’re earning a steady income. When you’re very young, you may not want to think of growing old. However, it inevitably happens to everyone, and those who plan and stay with an adequate investment portfolio will enjoy their golden years free of financial worries.