It is common among investors to have major questions regarding their retirement portfolios. As time goes by, one of the questions that most commonly come up has to do with the goals reflected in those portfolios. These goals are what inform the building up of a portfolio in the first place; and as they change, an investor with the help of a financial advisor must go through and make adjustments to that set of investments to realign them accordingly.
Many Variables Affect Retirement Investments
There are many different things that can affect the goals fueling your retirement investment choices. Several of these variables are common across all investors, and thus are the ones most worth covering in a brief rundown of things that can impact your goals as an investor. The first and most obvious is your age. Younger investors saving for retirement are typically just getting themselves established. They are buying their first homes, paying off student loans, and generally figuring out how to cope in the financial world. Many of these young investors begin their retirement savings with an IRA or 401k offered though work.
As we get older, other investments begin to complement these retirement accounts as they grow. Mutual fund investments, annuities, and real estate purchases diversify our portfolios and give us more ways to grow our savings toward that big day in the not too distant future. This brings up another major factor that always affects the choices we make in investing for retirement: our desired retirement age. The sooner you wish to retire, the more aggressive you need to be in your investing. At the same time, trying to retire early also requires a greater sum total of capital to live off of because it has to last longer on top of being readily available sooner.
Contribution Levels Impact Portfolio Health
The monetary levels of contributions you make (and those of your employers if you have accounts with a company match) make a huge difference in the goals you can reasonably make regarding your retirement date and level of income you hope to achieve after you quite working. If you are able to make rapid progress early on increasing your nest egg and allowing your money to go to work for you, you stand a much better chance of being able to call it quits at, say, age 55 than you could if you got a later start or were not able to contribute much early on. The employer contribution piece works the same way. It is amazing when you calculate it out how much your overall portfolio can be enhanced if you even get a few percent of your annual salary added to your accounts each year by your employer. This little bit of extra helps take care of your tax obligations, and just increases that principal amount working for you and making money over time.
Future Eligibility Makes a Difference
In much the same way, your eligibility for programs and non penalized access to funds does more than just affect the goals you can set as an investor. It very likely dictates the edge of your best case scenario. If you can't touch your funds without penalty until you are 59 years old, for example, you either have to find a way to set aside extra money to live off of from your retirement date until that time; or, more likely, wait to hang up the work apron until that time arrives on the calendar. Many variables affect the goals you can reasonably hope to achieve.