Retirement investing: How to take control


We’re facing a well-documented retirement crisis with Americans living longer, and many setting aside little or nothing for their retirement investing.

First, the bad news:

  • Only 14% of Baby Boomers are very confident they will be able to retire comfortably.

  • One in four Americans have ZERO saved for retirement. The figures are even worse for younger Americans, with 32% of Millennials not saving at all for retirement.

  • More than half of do-it-yourself 401(k) investors are unengaged.

  • The future isn’t encouraging due to a stagnant economy and wages, and half of American households may not have enough to maintain their standard of living in retirement.

We could reel off many more depressing data points on the state of retirement investing, but would that really be helpful for those who need to get on track?

Ben Steverman at Bloomberg has a thoughtful piece this week on why focusing only on the difficulty of the challenges can actually make the problem worse.

“Fear is a poor motivator, as those who advocate exercise and smoking cessation know,” Steverman writes. The article explains how some Americans “have given up in the face of what they perceive as an insurmountable challenge.”

Instead of scare tactics and making retirement investing seem like a dreary chore, a better approach might be to set goals and “focus on specific things you’re setting aside money for,” Steverman writes.

“You’re rewarding yourself when you retire, rather than just taking from yourself now,” said Harvard Business School professor Michael Norton, in the article.

One way to take control of your retirement investing is to be aware of common mistakes so you can avoid them. These include paying too much in fees and not taking advantage of company 401(k) matching programs. It’s also important to understand the various types of retirement accounts and which one might be best for your needs.

Another common mistake is failing to set up a retirement investment portfolio that matches up with your goals and risk tolerance.

At Covestor, many of the portfolios on our online investment marketplace are available to Individual Retirement Accounts (IRAs). They can be sorted here.

You can also download our free guide on selecting retirement portfolios.

Retirement investing doesn’t have to be a scary thing, and putting it off only makes catching up more difficult.

DISCLAIMER: All investments involve risk and various investment strategies will not always be profitable. Past performance does not guarantee future results.