In your 40s and 50s, paying your children’s
college bills, moving to a larger home, or spending money on things
you enjoy can put pressure on your retirement savings.
But, if you’ve established good investing
habits, such as participating in a salary reduction plan or contributing
regularly to an individual investment account, you should be on
track for meeting your long-term goals. And, given time, your
expenses will begin to decrease — the mortgage will be paid
off, the children will eventually grow up — or perhaps you’ll
inherit assets from your parents.
As your expenses go down, you can begin to
put more money into your long-term portfolio by increasing
your contribution to your employer’s salary reduction plan,
putting money into other tax-deferred accounts, and adding to
your taxable brokerage firm accounts.
Modifying your strategy
Chances are, even if you’re in your
40s or 50s, you’re not planning to retire for
another 10 or 20 years. If that’s the case,
you’ll still want
to invest a significant portion of your assets for
growth — in stocks and stock mutual funds.
As your retirement date approaches, you’ll
want to shift more of your assets into less
volatile
investments, such as high-rated
corporate
or
municipal
bonds
and
Treasurys.
That’s because you don’t want to risk a
big loss of value if the stock market drops at this
stage in the game.
