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How to Create an Investment Plan for the Retirement You Want


Before you can create an investment plan for the retirement you want, you’ll want to think about your desired lifestyle. By identifying your retirement goals early, you can tailor your investment strategy to meet your specific needs, such as travel, healthcare and daily living expenses. A sound investment plan not only helps in accumulating the necessary funds, but also provides a roadmap for navigating market fluctuations and economic uncertainties both before and after your target retirement date.

It never hurts to get a second opinion on your investments for retirement. Consider reaching out to a financial advisor to ensure that your retirement plan is on track.

Understand Your Retirement Goals and Expenses

Investment planning for retirement begins with understanding your goals as well as what your retirement expenses will be once you stop working. Start by envisioning what your ideal retirement looks like, and consider factors such as plans for travel and leisure, or hobbies or activities you’ll want to pursue.

It will also help to estimate your expenses in retirement. Not just in terms of your ideal retirement, but the more practical matters and necessities. This includes things like where you’ll live, any mortgage or rent payments, taxes, healthcare costs, utilities and other bills, etc. You’ll also want to account for inflation, which can significantly impact your purchasing power over time.

A clear goal and a detailed estimate will serve as the foundation for your investment planning retirement strategy. These details will help you determine how much income you’ll need during retirement, so you can create a plan to get there.

Assess Your Current Financial Situation

A senior reviewing a retirement plan to align it with her goals.

Once you have a clear picture of your retirement goals and expenses, assess your current financial situation. This step can also help you ensure that any goals you’re setting are realistic and attainable. You might find out that you would have to sacrifice more than you’re comfortable giving up now in order to attain the retirement of your dreams, and would rather scale back that dream to something more realistic in order to maintain your current standard of living.

In calculating your net worth, you add up all your assets, including savings, investments, and property, and subtract any debts. This can give you a good “big picture” type of view of your current financial situation. It’s also a good opportunity to assess any retirement accounts such as 401(k)s, IRAs and Roth IRAs, or consider setting up a retirement account. Each account type offers different tax advantages, contribution limits and withdrawal rules. A 401(k), for example, often provides employer matching contributions, which can significantly boost your retirement savings. Managing your accounts is an important part of maximizing your investment growth and tax efficiency.

Once you know where you’re starting from financially, you can determine how much you have to work with to reach your goals, and create a plan tailored for your situation that will help you get there.

Diversify as Part of Investment Planning

Diversification is a fundamental principle of investment planning retirement strategies. It involves spreading your investments across various asset classes, such as stocks, bonds and real estate, to minimize risk. This helps protect your investment portfolio from market volatility with the goal of achieving more stable returns and consistent growth over time.

It’s important to adjust your asset allocation based on your risk tolerance and the number of years you have until retirement. You’ll also want to regularly review and adjust your plan to stay on track with your goals. This helps keep your investment strategy aligned with your retirement objectives, and allows you to adapt to any life changes or financial needs as they arise.

Consider Seeking Professional Advice

A financial advisor can provide valuable insights, help you avoid common pitfalls and tailor a plan specific to your circumstances, all of which can enhance your investment planning retirement process. Professional guidance is especially beneficial for complex financial situations or when nearing retirement age.

Bottom Line

A young couple meets with their financial advisor to create an investment plan for retirement.

Having a retirement plan is not only an important part of setting you up for financial security in retirement, it can also give you peace of mind. The process starts with understanding your current financial situation and desired lifestyle in retirement. Once you have those pieces in place, you can create a plan to get from where you are now, to where and how you want to spend the rest of your life.

Investment Planning for Retirement Tips

  • Are you creating your own investment plan, but don’t know where to start? Consider reaching out to a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • SmartAsset’s free retirement calculator can help you put together an investment plan for your retirement.

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