Marathon or Sprint: What’s Your Retirement Fund Strategy?


What's your retirement fund strategy

March 15, 2017

Have you noticed how some people jump into spring fitness with abandon – running at breakneck speed as if they’re trying to sprint away from the extra pounds they packed on during winter – while others take it slow and easy, with the sure-footed pace of a marathon runner?

This sprint versus marathon mentality also applies to financial fitness, especially when it comes to retirement planning for baby boomers.

Sprint toward Retirement Savings

The concept of saving for retirement isn’t new. In fact, Americans of most generations have been advised to begin saving for retirement when they entered the workforce. Maybe this was your plan, too, but then life got in the way.

“While highly recommended, beginning your savings plan with your first job and continuing until you're retired is rarely followed. Heck, I didn't follow it. For me, starting a business had me dumping money out of my retirement bucket instead of filling it,” wrote Gary Silverman in Times Record News.

The key is taking solid steps, even if those are relatively modest steps. Silverman acknowledges that even baby boomers who invested in retirement savings early on may have been derailed by health crises, widowhood or extended unemployment, forcing them to “reset their finances to no better (or even worse) than when they graduated.”

For these individuals – maybe even you – a sprint toward retirement will be their path. Retire by 40 offers some insight for baby boomers who are late-stage savers: “Sprinting at the end is good if you are already near retirement age. Even Uncle Sam knows that and lets you save an extra $5,500 in your 401(k) plan after you’re 50. The extra retirement saving will give you a little boost.”

If you find yourself sprinting toward retirement savings, don’t despair.

“It's still possible to close a significant savings shortfall, even if you're within a few years of your planned retirement date,” according to Eleanor Laise, a senior editor with Kiplinger. “While you may not be able to count on a surging stock market or steady employment, there are powerful factors within your control that can propel you into a secure retirement. These include maximizing the tax-efficiency of your portfolio, optimizing Social Security benefits, reviewing your asset allocation, and of course, saving more and spending less.”

Pace Your Way Toward Retirement

Although most Americans fall into the sprinter persona when it comes to retirement planning, others are more like marathoners, plodding their course strategically. Even then, however, marathoners often come up short on retirement savings.

The key is taking solid steps, even if those are relatively modest steps.

If you’re a baby boomer running a marathon toward retirement, here are two ways to finish in first place, according to Melissa Sotudeh, a certified financial planner writing for NerdWallet:

  • Preparation pays off. Stick to your investment plan and stay focused on YOUR economy, not THE economy. Make sure you have the right asset allocation and the most tax-efficient investment strategy, and that you rebalance your investments on a regular basis. Sotudeh suggests taking full advantage of your 401(k)-retirement plan or Roth IRA.
  • Adjust your savings if needed. Talk with a tax adviser about catch-up contributions to add to your tax-deferred retirement accounts.

If you are ready to set the pace for a secure retirement, ECCU has savings accounts for both sprinters and marathoners, such as our money market savings, promotional certificates – including a variety of certificates with terms from 6 to 60 months – and individual retirement accounts.

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