Day 20: Prepare for Retirement
Degree of difficulty: Moderate
Whether retirement is upon you or it's a distant dot on the horizon, it's an important stage of your financial life that needs addressing and the sooner the better.
Did you know, for example, that if you are 30 years old, receive a monthly salary payment, and expect to retire at 65, that you only have 420 pay days left to save for retirement? A scary thought. And that conventional wisdom calculates that the same 30-year-old needs to put aside 15% of their annual salary each year for the next 35 years to ensure that they have 50% of their final salary available post-retirement. And whether this 50% figure is going to allow you to retire in the style to which you've become accustomed is another topic that needs your consideration.
With these thoughts ringing in my head, I have put together a list of Morningstar's top pensions and retirement articles, which are aimed at helping both new and seasoned investors make informed decisions about preparing for retirement...no matter how near or far away it seems.
When it comes to setting up or reviewing your pension plan, whether you have a company pension or a personal pension, don't forget that while most pension providers will automatically direct your contributions to a default fund, each investor's goals and retirement needs are different and it is highly advisable that you assess your risk appetite and adjust your pension fund accordingly. A 55-year-old who is looking forward to spending their retirement years in a quiet country garden will have a very different investment strategy to a 25-year-old who doesn't yet know what retirement will bring but hopes it will include plenty of round-the-world cruises and octogenarian bungee-jumps.
When it comes to digging down into the funds on offer, Morningstar's fund reports provide a huge amount of information on thousands of funds. Our Fund Quickrank allows you to search funds by category, Morningstar qualitative rating, performance, fees, and so on, while our Fund Screener helps you search for funds according to your personal criteria. You can also take advantage of our free Portfolio Manager tool to create and track your portfolio (real or imagined).
The articles listed below can help you address you pension and retirement needs. You may also want to search our Portfolio & Money Management article archive for more information.
1. What is a Pension? How Do I Get a Pension?: This back-to-basics article gives an overview of the different kinds of pensions available to British investors. (This fun video also summarises the pension environment in the UK.)
2. The 80% myth: Morningstar's John Rekenthaler looks at whether we really "need" to be aiming for 80% of our pre-retirement income to live on and points out that many live happily on much less.
3. Tips for investors just starting out: An introductory explanation of some of the best ways to begin investing.
4. Are you taking too much (or too little) risk? By assessing your pain threshold early on, investors should be able to improve their overall return records.
5. Lessons from the lost decade in stocks: Hidden in the relatively poor returns of the past ten years are some rich lessons for the future.
6. Why diversification still matters: Although tested mightily in the bear market, a diversified portfolio is less risky than one that's concentrated in one area of the market.
7. Good funds can make a bad portfolio: We take a look at five investor mistakes and suggest solutions to ensure you make better investment decisions.
8. Portfolio rebalancing made easy: Your step-by-step guide to restoring your asset allocation.
9. Keeping tabs on your portfolio: Make sure you're looking at more than just performance--skewed asset allocation, rising fees and management changes are all important.
10. In retirement? Don't turn a blind eye to the threats that can erode the value of your portfolio over the long term.
Return to the article: "The 30-Day Financial Fitness Plan".
