Age-based Investing

A retirement checklist for every decade

Start planning today

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It's never too late—or too early—to start planning for your eventual retirement. The Adventist HealthCare Retirement Plan, along with human capital and management consulting services provider Hewitt Associates, has compiled a list of retirement strategy steps people should take in each decade of adulthood, from their 20s to their 60s. In the following slideshow, CNBC presents excerpts from the checklist.

Source: Adventist HealthCare Retirement Plan and Hewitt Associates

By CNBC's Kenneth Kiesnoski
Posted 27 July 2015

20s: Establish good money habits

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Start saving—create a budget and stick with it. Take advantage of your employer match by saving at least 4 percent of your salary in your retirement account. Need help with your budget? Hundreds of apps and online budgeting tools are available to make budgeting easy and fun. Try Google "budgeting apps" to get started.

Put the power of compounding to work for you. Compounding growth—financial speak for when the earnings on your money earn money, and then that money earns money, and so on—can help you reach your retirement goals. The earlier you start saving, the more you'll benefit from compounding growth.

Source: Adventist HealthCare Retirement Plan and Hewitt Associates

30s: Invest more aggressively

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Save for your future. Whether you're saving for a down payment on a house or for your child's future education, there are likely more things competing for your money than when you were in your 20s. However, it's still important to save as much as you can and give yourself peace of mind by creating an emergency fund to cover your expenses for three to six months.

Create an investment strategy. Because retirement is a long way off, you can invest more aggressively, with a greater concentration in stocks and less in bonds and other more stable assets.

Source: Adventist HealthCare Retirement Plan and Hewitt Associates

40s: Set priorities for saving

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Save as much as you can. Before the age of 50, the IRS lets you save up to $18,000 annually before taxes in your retirement savings account. If that amount is out of reach, save as much as you can today. Then commit to increasing your contribution rate by 1 percent each year. By doing this, you could be saving 10 percent more by the time you reach your 50s.

Make sure you're on track. Log on to your retirement plan account website and use "online tools" to check your account status and make sure your retirement savings are on track.

Source: Adventist HealthCare Retirement Plan and Hewitt Associates

50s: Leverage catch-up contributions

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Max out your savings. Beginning in the year you turn age 50, the IRS lets you save more in your retirement savings account through a "catch-up contribution." For 2015, you can save an extra $6,000 before taxes in catch-up contributions. That means you can save up to a total of $24,000 annually.

Pay attention to asset allocation. In general, the closer you get to retirement, the more conservative your portfolio should be. But financial experts recommend you continue to invest in some stocks, because your portfolio needs to grow to help your savings last through retirement. A rule of thumb to determine the appropriate stock-to-bond ratio is to subtract your age from 100 to determine the appropriate level of stock your portfolio should have. For example, a 55-year-old should generally have 45 percent in stocks (100 – 55 = 45), with the rest in bonds or fixed-income investments.

Source: Adventist HealthCare Retirement Plan and Hewitt Associates

60s: Check your retirement readiness

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Ask yourself if you're ready. Before you decide on your retirement date, consider whether you're ready both financially and emotionally to move into this next stage of your life. Your retirement could last more than 20 years, so it's important to consider your options.

Review your investment portfolio as a whole. This includes not just your [current retirement plan] but plans from previous employers, IRAs, real estate, investments and personal savings. Learn about Social Security and Medicare and how these may be additional resources for your retirement.

Source: Adventist HealthCare Retirement Plan and Hewitt Associates