Saving for Retirement
Presented by: Matthew A. Clayson
Saving for retirement is better than spending every dollar you earn, but just putting money aside probably won’t get you where you want to be. That’s why investing may be a crucial component of any retirement plan. It takes the money you earn from work and allows it to go to work for you.
A successful retirement investment strategy often touches on the following principles:
- Start early
- Invest more aggressively to start
- Diversify investment risk
- Keep fees low
- Transition into safer investments over time
Whether you’re investing on your own through an IRA, through your employer with a 401(k), or both, here’s what you need to know about laying out an investment strategy that will hopefully get you from where you are now to a comfortable retirement.
Start early with your retirement investment plan
If you’re earning income from a job, you can open a traditional or Roth IRA. Minors can start saving through a custodial account that a parent has control over until they turn 18 or 21, depending on the type of plan and what state they live in.
Let’s say that when you’re 25, you start saving for retirement by investing $100/month and assume a moderate average annual return of 5 percent. By the time you’re 55, you’ll have about $80,000.
If you don’t start saving for retirement until you’re 35, you’ll have to invest $200/month to earn the same amount by age 55 at the same return. If you only invest $100 a month, you’ll have to earn an 11 percent rate of return to end up with the same amount by age 55.
Invest more aggressively to start
It’s important not to panic and change your investment strategy if this happens, experts note. Rather, it may be a great time to stay invested and invest more so you can follow the adage “buy low, sell high.”
In other words, when stocks plummet, you can likely buy them on the cheap. Over time, assuming the market rebounds, you’ll have the opportunity to experience investment growth that people who withdrew from their investments missed out on.
But just because an investment entails risk doesn’t mean it will pay off. The type of risk you want to take is a calculated, time-tested one. Over more than a century, betting on the U.S. economy by investing in the stock and bond markets has proven rewarding. However, putting all of your money into a single company, no matter how well it appears to be doing, is the type of risk many people don’t want to take.
Diversify investment risk
All investing carries risk: You might lose money. Investments are not guaranteed to increase in value and are not FDIC insured.
Not investing also carries risk: Your money may lose value to inflation over time, and without putting your money to work through stock and bond markets or other financial vehicles, it can be challenging to accumulate enough for retirement.
Mutual funds provide an easy way to invest in a professionally managed portfolio consisting of dozens or even hundreds or stocks, bonds, and other securities. Mutual funds can be a great choice for people who don’t have the time, interest, or know-how to invest in individual stocks and bonds.
Exchange-traded funds, or ETFs, and index funds are similar to mutual funds in many ways, but they usually aim to copy the performance of a market index, such as the S&P 500® Index. Owning shares of mutual funds or ETFs is a little like having an investment manager working for you who requires little of your time or money.
Keep investment fees low when saving for retirement
Almost all investments have fees. For mutual funds, you might pay a commission to buy or sell a fund, an ongoing fee called an expense ratio for the fund’s management, or a sales charge. For ETFs, you’ll pay an expense ratio and possibly a commission.
ETFs are usually passively managed, meaning you’ll pay a lower expense ratio to own them; mutual funds can be actively or passively managed.
Why are fees so important? In the same way that investment returns compound over time, the effect of fees on your portfolio compounds over time. The higher your fees, the less money you have to invest, and the lower your net returns tend to be. Further, investments with higher fees have no guarantee of outperforming investments with lower fees. That’s why it’s important to do your research or hire a trusted professional to do it for you.
Transition into safer investments over time when saving for retirement
It’s important to take enough risk to meet your goals while maintaining enough safety to feel comfortable. As you get closer to retirement age, you have less time to recover from a market downturn, which means you need more safety and less risk in your portfolio.
Bottom Line
Most savings accounts don’t pay enough interest for your nest egg to support you through several decades of retirement. Investing in a careful, risk-managed way can allow you to outpace inflation and multiply your savings over the years.
Don’t want to go it alone? A financial professional can help you create a plan for your retirement.
AI as a Self-Diagnosis Tool
Artificial intelligence (AI) has contributed to significant advances across many industries. Now, many people are using it as a tool for self-diagnosis or to get answers to health-related questions.
Self-diagnosis is a growing practice, as people’s primary access point for health care information has shifted from professionals to the internet. Given the rising popularity of AI as a source of information for health-related questions, you may wonder if it’s a good resource for self-diagnosis and medical information.
Generative for Health Care
Generative AI is a type of technology that produces content such as text, images or audio. Common tools used for this purpose include OpenAI’s ChatGPT and Google’s Med-PaLM. Amid a shortage of health care workers, chatbots like these could help answer your questions. Initial tests by researchers so far suggest these AI programs are more accurate than a standard Google search.
Pros of Using
Using AI tools for medical self-diagnosis can potentially reduce costs for patients and health care providers. Possible benefits of using generative AI include the following:
- Increased accessibility
- Improved health literacy
- More efficient triaging
- Preserved anonymity
These factors can enhance patient experience and improve engagement. Additionally, chatbots are easier to use than online symptom checkers.
Cons of Using
Although generative AI has the potential to help you with medical self-diagnosis, this technology has limitations and pitfalls, such as:
- The potential to provide false information
- The ease of misinterpreting information
- Ethical concerns (e.g., data privacy and bias)
- The risk of ignoring medical advice
Therefore, some chatbots have disclaimers that they should not be used to diagnose serious conditions, provide instructions for curing conditions or manage life-threatening issues.
Considerations for Using AI for Self-diagnosis
While generative AI tools may help you quickly answer health-related questions and self-diagnose conditions, solely relying on them for information or medical assistance could be unsafe. However, these tools can be a useful resource to help you obtain accurate and timely health advice and information, as long as you understand their limitations.
Contact your doctor for the most accurate and personalized health care information and guidance.
Safety Tips for Exercising Outdoors and Brain Health
As we move into summer, many will want to exercise outdoors to stay active and get some fresh air. That’s great news, as health experts recommend at least 150 minutes of moderate aerobic activity each week. Also, moving your exercising outdoors can boost your mood and improve your concentration.
| The U.S. Bureau of Labor Statistics reports that walking is the most popular type of exercise |
Trails, exercise parks, sports fields and stairs provide endless opportunities to switch up your workout. However, working out in hot and humid weather can put extra stress on your body, so consider the following tips to safely exercise outdoors:
- Avoid the hottest part of the day. If possible, plan your workout before 10 a.m. or after 3 p.m. to dodge strong sun rays.
- Wear light-colored clothing. Dark colors absorb the heat, while light colors reflect the sun. Lightweight, loose-fitting clothing will help air circulate and keep you cool.
- Apply sunscreen. Choose a broad-spectrum sunscreen that’s at least 30 SPF. Reapply every two hours, even if the label says it’s sweatproof. Wearing a wide-brimmed hat can also protect your face from the sun.
- Stay hydrated with water. Drink water before you head out and try to take sips every 15 minutes during your workout—whether you’re thirsty or not.
- Replenish your electrolytes. Instead of reaching for a sports drink after a workout, consider replacing your electrolytes with foods like chia seeds, kale, coconut, or fruits and vegetables.
- Listen to your body. If you’re feeling dizzy, faint or nauseous, stop exercising immediately. Sit in the shade and drink water until you’re feeling better.
How Nutrition Impact the Brain
Nutrition plays a critical role in brain function, as the brain is one of the most metabolically active organs in the body. The brain requires a constant supply of nutrients to maintain its structural and functional integrity, and a deficiency in any of these nutrients can significantly impact brain health.
Certain nutrients have been shown to have a positive impact on brain function. For example, omega-3 fatty acids found in fatty fish (e.g., salmon and tuna), nuts and seeds have been shown to improve cognitive function, memory and mood. The B vitamins in leafy greens, legumes and whole grains are important for producing neurotransmitters that regulate mood and behavior. Antioxidants, which are found in colorful fruits and vegetables, protect the brain from oxidative stress and inflammation. Overall, a well-balanced diet rich in nutrients and low in processed foods and sugar is essential for optimal brain health and function.
Talk to your doctor if you have questions about brain health.