The 40-year retirement strategy

The 40-year retirement strategy

The 40-year retirement strategy

Are you ready to live to l00? Longevity is on the rise, thanks to improvements that have been made in health care and lifestyle, and it’s an exciting development.

According to the Human Mortality Database, children born today in the developed world have over a 50 percent chance of living past the age of 100. And according to the Social Security Administration, 1 every 4 65-year-old Americans can expect to live past age 90.

There's a growing awareness of the importance of the balance between physical, mental and financial health.

However, declining pensions and the uncertainty of Social Security have put many Americans’ retirements and their financial wellness on shaky ground.

Retirement strategies that can financially handle the challenges of longevity – 40-year retirements – are critical to Americans’ long-term wellbeing.


That’s why legislation such as the Setting Every Community Up For Retirement Enhancement (SECURE) Act, which was approved this month by the House Ways and Means Committee, and the Retirement Enhancement and Savings Act (RESA), which has been introduced in the Senate, must be prioritized by Congress. They are important steps toward empowering Americans to understand and address the financial implications of their longevity.

Despite the optimism of longer life expectancy, more than half of Americans aren’t sure their current retirement savings plan will provide for a 100-year lifespan, according to new research from AIG. And, alarmingly, 59 percent of Americans fear running money more than death.

This fear is not misplaced. A new report from the Government Accountability Office found that of Americans nearing retirement, 29 percent have no retirement savings – neither a defined benefit plan a pension nor a defined contribution plan a 401(k).

At the same time, there’s been a decline in traditional pension plans in recent decades. Only 5 percent of Fortune 500 employers now offer defined pension plans to new hires, and Social Security payments at best replace just 40 percent of the average American’s income in retirement.

Today, 62 percent of U.S. households lack protected lifetime income in the form of an annuity or pension, according to the Alliance for Lifetime Income.

In the past several decades, workers have been encouraged to amass a pool of savings for retirement through plans 401(k)s and IRAs.

Savings are a crucial component of any retirement strategy, but savings alone may not be enough for most people to bridge the income gap between their needs and resources in retirement.

Can’t be tackled alone

We need solutions for what is a looming retirement crisis that has significant implications for our country. It is a challenge that can’t be tackled alone. Individuals, employers, financial institutions, advisors and legislators all have a part to play in helping Americans achieve retirement security.

If enacted in law, the bipartisan SECURE Act and the similar RESA will go a long way toward improving how Americans plan for retirements that could last up to 40 years or longer – and could help avert the retirement crisis facing generations of American workers, from millennials to baby boomers.

By clarifying the safe-harbor rules for selecting an annuity provider and ensuring the portability for employees, the SECURE Act will encourage more employers to offer annuity options in their retirement plans, giving people more choices to prepare for a secure retirement.

Additionally, it will require employer-sponsored retirement plans to provide participants with an annual statement showing how their lump-sum savings translate into an estimated lifetime stream of monthly income from an annuity – making 75 percent of workers more ly to increase their savings level.

The legislation also contains important provisions that will incentivize and make it easier for small businesses to offer 401(k) plans.

These provisions are sorely needed –a 2017 survey from the Pew Charitable Trusts found that only 53 percent of small and mid-sized businesses offered a retirement plan.

Long-term, part-time workers – many of whom work at these small businesses – will also be able to participate in 401(k) plans.

Additionally, the SECURE Act will provide more time for individuals to build retirement savings by eliminating the age cutoff for IRA contributions and increasing to 72 the age for beginning mandatory distributions from retirement accounts.

Even people who have managed to save a lot for retirement aren’t always sure how to convert those assets into reliable income that will last their lifetime. According to AIG’s research, only 9 percent are “extremely confident” that they will have enough income to last through their retirement.

Having an annuity as part of one’s portfolio helps protect retirees even if they run savings due to longer life expectancies. Economists have long championed protected lifetime income as the best means for doing that.

But, right now, most Americans are not able to contribute to an annuity over time through their 401(k)s. By making this possible, this new legislation will help bridge the lifetime income gap left by pensions and Social Security.


Changing the retirement mindset from one that prioritizes savings, to one that emphasizes savings and income for life, will take not only effective legislation but a collaborative industry effort. By arming future retirees with new strategies around financially planning for longevity, we can ensure that Americans are entering the best years of their lives with confidence.

Kevin Hogan is the chief executive officer of AIG Life & Retirement.


5 Strategies for 40-Somethings Who Are Way Behind on Retirement Savings

The 40-year retirement strategy

There are a lot of scary retirement charts that tell you how much you should have saved for retirement. One commonly cited figure by Fidelity Investments says that by the time you're 40, you should have three times your annual income set aside.

But let's face it: That number is laughably unrealistic for a lot of people. If you've lived paycheck to paycheck for long stretches or carried significant student loan debt, you probably couldn't afford to invest much in your 20s.

If you're in your 40s and you're behind on investing, you've missed out on some of those magical compounding years. You still have plenty of time to save, though, but it's essential that you do so strategically if you want a comfortable retirement. Follow these rules if you're a 40-something who's in catch-up mode.

Image source: Getty Images.

1. Get your 401(k) match, then fund an IRA

Having access to a 401(k) plan with an employer match makes a huge difference when your retirement fund is lacking. Make getting your full 401(k) company match your No.

1 priority if your employer offers one.

If you're deciding between jobs, give it serious weight if one company is significantly more generous with 401(k) matches, particularly if you're catching up in your 40s.

Once you're contributing enough to get the full match, consider maxing out a Roth IRA before you put extra money in your 401(k). (You can use a backdoor Roth IRA strategy if your income exceeds the limits.

) You'll have way more investment options and greater flexibility, plus you'll get tax-free money when you retire. The maximum IRA contribution is $6,000 for people under 50 in 2020 and 2021.

Once you've maxed out your contribution, you can decide whether to make unmatched 401(k) contributions or use a taxable brokerage account if you have extra money to invest.

2. Pay off debt selectively

The average credit card APR for users who carry a balance is 16.61%, which is well above your expected investment returns. So paying off credit card debt takes precedence over investing — beyond getting your 401(k) match — because it's costing you more than you can consistently earn.

But all debt isn't the same. With mortgage rates well below 3%, using extra money to invest instead of making extra payments on your home is a much better bet. Regardless of what type of debt you have, be sure to compare the interest rate you're paying with your expected returns. If your interest rates are low, investing instead of paying off debt often makes sense.

3. Obtain solid health coverage

Your health risks start to creep upward in your 40s. To protect the savings you have, it's essential to have adequate health coverage so you won't need to tap your nest egg for a big medical expense.

The tax benefits of health savings accounts (HSAs) are undeniable. But you can only fund an HSA if you have a high-deductible health plan.

If you have major medical issues or you couldn't afford to pay a high deductible, choosing a plan with a lower deductible is smart, even if your monthly premiums are higher.

On the flip side, a study by the TIAA Institute found that employees who overpay for health insurance are 23% more ly to skip their employer retirement match.

If you're healthy, choosing a lower-cost plan can help you save more for retirement. And using an HSA can supplement your retirement savings, since you can withdraw the money penalty-free for any reason once you're 65.

4. Keep taking risks

You may feel you can't afford to take investment risks in your 40s. But realistically, you're still about two decades away from retirement. Only by taking sufficient risk will you generate the returns you need to make your money grow. That means you'll still want to invest in stocks primarily.

One good guideline to follow is the 110 rule: Subtract your age from 110 to get your proper stock allocation. So if you're 40, you'd want a portfolio that's 70% stocks. 

5. Prioritize your retirement over college savings

Parents, this one is tough. Of course you don't want your kids to graduate buried in student loan debt. But your children have plenty of options for making their education more affordable, including choosing a less expensive school, financial aid, scholarships, and working part time.

Your opportunity to build your retirement savings gets narrower by the year. You don't want to be financially dependent on your kids in what should be your golden years. So think of securing your own future as the best investment you can make in your children.

“,”author”:”Robin Hartill, CFP (TMFRobinHartill)”,”date_published”:”2021-01-01T11:35:00.000Z”,”lead_image_url”:””,”dek”:null,”next_page_url”:null,”url”:””,”domain”:””,”excerpt”:”You still have time to build that nest egg.”,”word_count”:772,”direction”:”ltr”,”total_pages”:1,”rendered_pages”:1}


40 With No Savings? How to Retire a Millionaire

The 40-year retirement strategy

Here’s something you may not have thought about when you celebrated your 40th birthday: You’re almost as close to traditional retirement age as you are to your high school graduation.

It’s true! The year most of us turn 41, we’re mid-way between receiving our high school diploma and receiving our gold watch (if they still gave out gold watches for retirement).

If that thought stirs a bit of fear in your heart, you’re not alone.

The Employee Benefits Research Institute reports that 37% of all employees age 35–44 and 34% of employees age 45–54 have less than $1,000 saved for retirement.

If you’re one of those folks, you’ve got your work cut out for you if you want to build a $1 million retirement nest egg. Maybe you’ve already decided it’s your reach.

Don’t give up hope yet! Even if you’re 40 years old with nothing saved for retirement, it is possible to reach your $1 million retirement goal—and it might be easier than you think.

A Couple of Numbers That Could Change Your Future

In order to retire with $1 million in 25 years, a 40-year-old just getting started would need to invest $800 a month—a little less than 20% of the average $50,000 income.

Be confident about your retirement. Find an investing pro in your area today. 

Delay retirement until age 67, and you can reduce your monthly investing amount to $650, a little more than 15% percent of a $50,000 income.

Whichever option you choose, you need to put your money to work where you’ll get the most bang for your buck.

The easiest and often most effective way to get started is through your workplace retirement plan—a 401(k) for most of us.

Most employers who offer a 401(k) will match a portion of your investment, so invest enough to get the full match for an instant and guaranteed 100% return on your money!

If your employer offers a Roth 401(k) option and the plan offers a choice of good growth stock mutual funds, you can invest the entire amount in your workplace plan. If a Roth 401(k) isn’t available, simply invest up to the employer match in your 401(k) then open a separate Roth IRA to invest the remainder.

Can You Make Those Numbers Work?

So now that you know it is possible to reach your $1 million retirement goal, you’re probably wondering if you can afford to invest as much as 20% of your income each month to reach that goal. The quick answer? Yes, but . . .

If you’re debt except for your home and have a fully funded emergency fund(3–6 months of expenses) then yes, you can afford to invest up to $800 a month for retirement. But, if you’re not on a budget, you probably don’t believe you can afford it.

If you don’t plan your spending each month, it’s easy to feel you’re broke all the time. Isn’t that why you’re behind on retirement savings now? A budget allows you to set your spending priorities before the month begins, so you always know where your money’s going and how it’s working for you.

Begin with the basics: food, shelter and utilities, clothing, and transportation. Retirement needs to come right after that in your budget.

Divvy up the remainder of your income among the rest of your spending categories. You’ll probably find that you have to cut back on some line items eating out or travel for example.

But making that sacrifice now means you can look forward to a comfortable retirement.

Related: Imagine how much faster your nest egg could grow with an extra $700 or more. You could find money that simply by having an independent insurance agent check your insurance rates.

The Only Reason to Delay Investing Today

On the other hand, if you’re still in debt, you truly don’t have much leftover cash to invest for retirement. The average car payment is creeping toward $500, and the average student loan payment clocks in at nearly $250. According to Statistic Brain, consumers spend nearly 14% of their income on credit card debt alone! No wonder retirement savings takes a back seat!

The solution to getting debt and getting started on your retirement goals is the same as for folks who are already debt-free: get on a budget. Your priority is to get debt as quickly as possible. Set retirement saving aside for now. Budget for the basics then tackle your debt using the debt snowball method.

Once you’re debt-free, you’ll be a pro at budgeting. All you’ll have to do is adjust your focus to retirement investing and keep it going for the long haul.

Trade Your Retirement Worries for a Million-Dollar Outlook

You may have let the previous 20 years of your career roll by without getting serious about retirement savings, but that doesn’t mean you have to spend the next 20 years the same way. Change your habits now, get on a plan, and change your future for the better!

Talk with an investing professional who will help you choose your long-term mutual fund investments, keep an eye on their performance, and keep you on track to retire according to plan. Don't know where to start? Talk with an investing professional in your area today.


Best Investment Strategies For Your Forties

The 40-year retirement strategy

Turned 40 recently? If you want to retire at 65, you’re nearly halfway through your working years. It’s a great time to take a look at your financial future and see if you’re on track.

We’re asked a lot of questions from people in this age bracket. Common ones include:

“Am I saving enough for retirement?”

“What is the ideal investment strategy for 40 year olds?”

“Should I invest conservatively or aggressively?”

“How aggressive should I invest?”

“What’s the best asset allocation for 40 year olds?” 

Before we dive in, some great news: When you turn 40-years-old, there’s still ample time to grow your savings – if you manage it right.

In this article, we will show you how you can retire with a healthy passive income – without missing out on the activities you love (it’s all about working smarter, not harder).

Rule #1: Don’t invest in your bank account

Meet Anne, a 40-year old professional. Anne’s done (almost) everything right, and she has 100,000 francs in the bank. She doesn’t need this money in the short or medium term; it’s earmarked for retirement.

To live comfortably, Anne’s goal is to retire with 1,000,000 francs at age 65. This would give her an annual income of around 50,000 francs for 20 years, in addition to her payments from the old-age insurance system (a.k.a. “AHV”, pillar 1) and her pension fund (a.k.a. “BVG”, Pillar 2).

Anne’s goal is very achievable.

But there’s one thing she should do straight away – get that 100,000 francs the bank, where it’s collecting close to zero interest!

Not only is she missing out on an opportunity to grow her savings, but there’s also the problem of inflation.

Let’s assume inflation holds steady at today’s rate of 0.7 percent per year, and a typical Swiss bank account continues to provide 0.01 percent returns. In five years, that means you will need 10,350 francs to buy what you could have bought with 10,000 francs today.

Meanwhile, your bank account will have only grown to 10,005 CHF. In other words, you will be poorer than when you deposited your savings.

Rule #2: Don’t be too conservative

What’s the best investment strategy for 40-year old women? There’s no one-size-fits-all investment strategy for Anne’s demographic. Age is one of many factors Yova considers when shaping an investment strategy – it is important because it’s closely related to a person’s investment horizon.

At 40 years old, Anne’s investment horizon is around 25 years (give or take). Since she needs to start accessing her money when she retires, that’s the point when her investments start moving into cash. After all, retirees don’t have the luxury of waiting for the market to bounce back after a dip!

However, we often see people in their forties being too conservative with their investments – keeping large amounts of money in bank accounts or investments that offer very low growth.

It’s understandable. With the Global Financial Crisis in their memory, some people tend to be a little wary of the stock market.

But do you know how long it took for the stock market to recover after the GFC?

Let’s think about the unluckiest investor, who put their money in the stock market at the very peak of the stock market in 2007. How long did it take before they started making a profit?

Only four and a half years.

As this graph shows, investors who were able to ride out the storm for a few years were soon making strong gains once again.

Stock Market Performance 2006-2017

Yova Graphic

Going back to the crash of 1929, which spurred The Great Depression, the charts look it took more than 25 years for the market to recover. However, research reported by the New York Times found investors at this time also broke even after four years and five months if you account for dividends received as well as the Consumer Price Index.

Of course, past performance is not a reliable indicator of future performance, and it’s important to go into any investment with the understanding that you could lose your money.

Rule #3: Allocate your assets correctly

After establishing Anne’s risk profile, Yova will decide how to divide her investment money between stocks and bonds (Read more: Why these two assets?)

Stocks are the more aggressive or “dynamic” option because they tend to move up and down in value on a daily basis. Bonds are more conservative because they have better day-to-day stability. But compared with stocks, they show less growth in the long-term.

The stock markets yielded average annual returns of 6% over the past 150 years. But as we mentioned, some of those 150 years have been ugly: the Wall Street crash of 1929 and the Great Depression, Black Monday in 1987, and the stock market crash in 2008.

It’s not a matter of aggressive vs conservative. For now, we recommend Anne take a balanced approach. She has a reliable income and a long investment horizon ahead of her. But she also has dependent children and other financial commitments. For that reason, we would typically recommend that she splits her investment between the stock market and bonds, which are less volatile.

What’s the ideal asset allocation for someone in their 40s?

A general investment rule is to deduct a person’s age from 100 (or 110 for those with higher risk capacity). The answer gives the typical percentage a person should hold in stock investments. The remainder should be put into high-grade government bonds, and other investments that are more stable (albeit with lower returns).

On a very simplistic level, that would mean Anne could consider holding around 60 percent of her money in stocks, and 40 percent in bonds. She would also need to include other investments she has, including property, when figuring out her final asset allocation.

Rule #4:  Save – 100 francs a month make a big difference

Many people hit their peak income in their 40s. You can splash out and buy nice things – from clothes and tech gadgets to cars and vacations.

And that’s great!

We don’t want to put a damper on all the fun you’re having. Just keep in mind that investment contributions in your 40s are early deposits; they accrue compound interest. If you’ve invested in the stock market, those deposits have doubled approximately every 8 years in the past.

(We discuss compound interest in more detail in our article The Easy Way to Double Your Money.)

Could you save 100 francs extra a month? Realistically, how about 1000? Either option will boost your investment significantly, and with Yova you’ll pay no additional fees when you add to your investment.

Although a small saving habit can have a big impact on your investment returns, there’s another very common phenomenon at play: “lifestyle inflation”. It’s when your spending increases as your income rises (e.g. you once rode a bicycle, now you need a late model car).

Left unchecked, lifestyle inflation can make it difficult to get ahead on your long-term financial goals.

With that in mind, Anne has decided to contribute an additional 1,000 francs to her investment account each month, in addition to her initial investment.

This is a great approach. With her new savings plan and investment strategy with Yova, forecasts her investment will grow to more than 1,000,000 francs by the time she retires in 25 years.

Let’s take a look:

Anne’s investment growthAsset ClassYear 0Year 1Year 10Year 15Year 20Year 25

Source: Yova. All figures in swiss francsNumbers are rounded to the nearest 100 francs

Anne will reach her savings goal!

By the way, this graph is conservative in that it includes annual rebalancing (important for risk management), as well as the consideration that Anne will ly want to move more of her investment into bonds as she gets older. 

Quick Guide: The best investment strategy for 40 year old men and women

  1. Have a goal: how much income do you need in retirement?
  2. Allocate your assets correctly – find the right balance between conservative and aggressive investing.
  3. Set up an automatic investment contribution to make your money grow

It’s easy to get started with Yova.

The first step is to get your personalised impact investing strategy on our website. It takes approximately 5 minutes and is completely free. You can adapt and tweak your personalised investment strategy before committing to anything.

Best of all, Yova strategies are designed according to your personal interests and values, with criteria such as renewable energy, electromobility, human rights, gender equality and more.

More questions? Check out our FAQs or contact our team.


Saving For Retirement When You Are In Your 40s |

The 40-year retirement strategy

In your 40s, you’re hitting your peak earning years and should be well on your way to achieving long-term savings goals.

But life can get in the way. Talk to financial planners and they’ll tell you that the typical 40-year-old is keenly aware of the need to save, but too few have taken the necessary steps to adequately prepare for retirement.

Many 40-somethings still don’t have a well-defined retirement strategy. Others save, but not enough. This stage of life often comes with big expenses, such as paying for your child’s college education, which makes it difficult to grow a considerable nest egg.

“People save what they can, do their best and figure they’ll count their chips later,” says Bill Baldwin, managing director of Argent Wealth Management in Waltham, Massachusetts. “But they need to calculate what they need at retirement and how much they’ll be able to draw from savings to support their lifestyle.”

It may be time to shift your saving habits into overdrive, but many 40-somethings are puttering along in first gear. Here are four savings goals to meet during this important phase of your life.

1. Get rid of debt and reach your savings maximums

Credit card balances can hit new highs in your 40s. This is a big impediment to saving for retirement. If you’re serious about saving, explore options such as a low-rate balance transfer credit card.

(Use Bankrate’s debt pay-down calculator to figure the fastest way to get rid of debt.)

On the other hand, if you’ve saved at least 10 percent of your paycheck over the past 15 to 20 years, congratulations. You may only need to tweak your habits to hit your savings goals. But if you’ve otherwise neglected retirement, you’re going to have to push hard to make it to the finish line.

For example, a 40-year-old who wants $1 million by the time she’s 67 must save $10,000 a year for the next 27 years and earn 9 percent a year to reach that goal. Impossible? Maybe not. But it means reducing your spending and making tough choices.

Top of the list: funding your 401(k) up to the maximum limit. For someone under age 50, that’s $19,500 in 2020. Even a 1 percent increase in your contribution can seriously improve your nest egg and have only a small effect on your paycheck.

If you don’t have access to an employer-sponsored retirement plan – and even if you do – consider either a traditional IRA or a Roth IRA. If you don’t have one, you may be missing opportunities to maximize your savings through tax advantages that come with IRAs.

For example, with a Roth IRA, you won’t pay taxes on future account earnings. But note that there are income limits for determining whether you’re eligible to save in a Roth IRA.

3. Maintain the right investment mix and reduce risk

Asset allocation and diversification remain as important as ever. At 40, you’re still a long way from retirement, so don’t rush to play it too safe, says Ellen Rinaldi, former head of the retirement agenda for Vanguard.

With more than two decades until a typical retirement, it still makes sense to have your portfolio heavily weighted toward stocks. While stocks are one of the most volatile asset classes, they also have among the best total returns over time. So while you might shift some of your portfolio to more conservative assets such as bonds, you’ll still want a sizable allocation going toward stocks.

Rinaldi recommends scaling back stocks to 80 percent of your portfolio and putting the balance in conservative holdings bonds.

Although the shift to bonds will reduce your portfolio’s total return, it will also tend to reduce its overall risk. So your portfolio will be less subject to the sometimes-wild swing of stocks.

4. Keep all your assets in view

Maintain a broad view of all of your holdings as you reallocate assets. It’s not enough to focus on just the 401(k). Take all of your investments into account.

Make sure you haven’t forgotten anything, a 401(k) or other benefits you may have earned at previous jobs. If it’s an old 401(k), roll that into an IRA, which you can invest any way you want.

“It happens all the time — people leave money in a 401(k) and forget about it. They take more time on their vacation than they do on retirement planning,” says Michael Scarborough, owner and CEO of Oak Wealth Partners.

5. Make tough decisions about education expenses

Ideally, 40-somethings with children have been saving for their kids’ higher education since they were in diapers. If so, they can avoid diverting huge sums of cash from their retirement savings.

Those who have neglected to save for college and whose retirement savings are not where they should be may not have enough money to fund both. As a parent, you want to take care of your kids, but financial advisers agree: Saving for your retirement should be your top priority.

“The last time I checked, there were no scholarships out there for retirement,” says Dee Lee, CFP and author of “Women & Money.”

Many parents sacrifice saving for retirement to help their kids, even those who have already graduated from college.

“When forced to make a choice, people support their own children first. They’ll put themselves last,” says Merl Baker, a partner at NMG Consulting, a financial consulting firm. “They’re reconciled to working longer than they planned or expected to. Or they accept a lower quality of life. It’s pretty powerful.”

If you’re determined to help your child and money will be tight, look for compromises that may have less impact on your nest egg, such as sending your child to a local, in-state school instead of an expensive private or out-of-state college.

6. Buy adequate insurance

The cost of health care seems to go only higher year after year, and we’re living longer and longer. Those are two reasons that long-term care insurance is the preferred choice for many consumers.

According to AARP, about half of Americans who reach age 65 will need some kind of paid long-term care. The average cost for those who pay pocket is a steep $140,000. While you can gamble that you won’t need it, it can make a huge dent in your retirement if you do need it.

AARP reports that the average cost of a long-term-care policy runs about $2,700 a year, citing data from industry research firm LifePlans. That’s not cheap, but it’s much cheaper to begin a policy early rather than later. If you wait until you’re near retirement, you may not be able to obtain affordable coverage or coverage that meets your needs.

7. Work with a financial adviser

If all this planning seems overload, a great option could be turning to a financial adviser. Experienced financial advisers have seen it all before, and will work to meet your financial goals. They’ll be able to set up financial plans that balance your needs and income, and they’ll help you establish your priorities – retirement saving vs college saving, for example.

In short, they’ll be able to help you get your financial house in order while you still have enough time to achieve your goals.

It’s important to note that you’ll want an adviser who is paid only pocket, for example, on an hourly basis. Such fee-only advisers are more ly to avoid potential conflicts of interest than advisers who are paid by big financial companies. You want a trusted adviser doing what’s best for you. Here are the other key things you need to find in a financial adviser.

If you’re looking for someone to manage only your investment plan, then a great option is a robo-adviser. A robo-adviser can set up an investment plan your time horizon and risk tolerance, and the price is typically lower than a human financial adviser, too. Here’s how a robo-adviser stacks up against a human adviser.

8. Consider working longer

While working longer is the exact opposite of retirement, this route is what it might take to make retirement comfortable. Working longer has a couple advantages, however, and may allow you to have a substantially better retirement.

First, working longer allows you to continue bringing in income. This extra money can be saved and invested, helping to secure your future finances. But un that full-time job that you probably had for most of your working life, you may not be under the same obligation to work as many hours.

So some people may choose to continue working, but do so at a reduced level. Or you may match your working hours more closely to your expenses. Meanwhile, your assets can continue to accumulate and give you a longer retirement runway.

Second, working longer also allows your portfolio more time to grow. And that could be an especially huge benefit if the market is down substantially when you originally wanted to retire. Not only will you be able to invest more money in a down market, but you’ll give your current investments more time to recover.

Even if the market is doing well during the time when you wanted to retire, an extra year or two of working could allow you to substantially increase your portfolio and better set yourself up for retirement.  

Learn more:

— This story was originally written by Leslie Haggin Geary.


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