While most people receive Social Security, a secure financial retirement depends on also having significant savings in a retirement account. Typically these savings must last nearly 20 years (assuming the average age for retirement is 63, and the average life expectancy as of 2021 for someone who reaches that age is 12.1 more years for a man and 17.5 more years for a woman). Of course, many now live beyond ✨this average expectancy.

The amount of money saved in retirement accounts depends not only on what you contribute during your work life (and how well those investments did), but on your investment returns after you retire. The🧸se depend on investment strategiꦆes.

A Coordinated Approach

If you have more than one retirement account, such as a 401(k) at work and a personal 澳洲幸运5开奖号码历史查询:individual retirement account (IRA), it’s essential to coordinate investment strategies across all your holdings. Without coordination, you may duplicate your holdings and not take full advantage of the diversification benefits on return and volatility of a portfolio. If you're married, you may want to 澳洲幸运5开奖号码历史查询:coordinate investment choices with your spouse's retirement accounts.

You may also want to coordinate your holdings in your taxable and 澳洲幸运5开奖号码历史查询:tax-deferred accounts. So if in addition to retirement accounts, you may have a taxable investment portfolio at a brokerage firm or with🐭 a mutual fund and will want to review your holdings in all such accounts. This enables you to put investments in the appropriate accounts depending on tax considerations and other factors.

For example, tax-free municipal bonds belong in your taxable account. If you put them in your tax-deferred retirement account, you will double penalize yourself by accepting lower returns and at the same forgoing the tax advantages of munis. In addition, the interest earned effectively becomes taxable, because distributions are taxed as ordinary income regardless of the source of the earnings.

Factors in Making Investment Choices

There's no single strategy for all individuals. Many factors come into play when choosing investments for retirement plans:

Your savings horizon

The longer you have until your expected retirement, the more risk you can afford to t♊ake. The stock market does experience severe downs. If you have years to go before you need the funds, you can weather the downs and expect to see the value of your account not only return to its pre-decline level but to an even higher level over time.

For example, the 澳洲幸运5开奖号码历史查询:Dow Jones Industrial Average hit a low of 6,626.94 on March 6, 2009, causing many accounts to decline 20% or more. But if you didn’t sell and your savings remained until now, with the market at about 31,000 as of January 2021, your account could have more than quadrupled.

Your risk tolerance

If you lose sleep when the stock market declines, your risk tolerance is low. This means you should invest in securities that are not impacted (or at least not impacted severely) by market swings, weighting your investments more heavily with bond funds, 澳洲幸运5开奖号码历史查询:U.S. Treasury bonds and similar securities.

Taxes

Retirement accounts are either tax-deferred vehicles such as 401(k) plans and traditional IRAs, where income tax is deferred until distributions are taken.  Or they are tax-free vehicles such as designated Roth accounts and Roth IRAs, where distributions from the account become tax-free after five years and other conditions are met.

Choose investments with taxes in mind. For example, you don't pay capital gains on stock appreciation or on stock dividends, so you can park your capital gains stocks in your 澳洲幸运5开奖号码历史查询:tax-advantaged retirement accounts. By the same token, recognize that even in tax-advantaged accounts you may have current income subject to tax (e.g., some types of 澳洲幸运5开奖号码历史查询:Schedule K-1 income), something you may want to avoid.

Inflation

澳洲幸运5开奖号码历史查询:Inflation has been relatively mild over the past several years. However, it has heated up in 2021 as economies emerge from the COVID-19 pandemic, and prices have increased more than 5% (annualized) for several months. Still, the market has no real guidance on whether this inflation is transitory or if it won't be going down anytime soon. Because of this, it is essential to keep a diversified portfolio and not be exclusively or even predominantly in bond funds or other investments that are adversely impacted by inflation. (As inflation pushes 澳洲幸运5开奖号码历史查询:interest rates higher, the 🍒value of an investment in a bond fund declines.)

Investment fees and costs

Some investments have higher fees than others. 澳洲幸运5开奖号码历史查询:Certificates of deposit don't have fees, for example, but there are fees for investments in mutual funds, annuꦇities and various other types of investments. Compare the fees and consider them a factor in your i༺nvestment strategy.

Selecting Investments

If you are in an employer-sponsored plan, you are offered a menu of benefits. For example, the average 401(k) plan offers a dozen or more investment options. It's up to you to select the type of investments suitable to your situation.

If you have an 🐻IRA, yoওu have more freedom in what you can choose for your portfolio. However, the law bars certain types of assets from being included in IRAs. Among them:

• 澳洲幸运5开奖号码历史查询:Collectibles. If you invest in any of the following, it's considered a distribution to you: artworks, rugs, antiques, metals, gems, stamps, coins, alcoholic beverages, and certain other tangible personal property. Not treated as collectibles are certain gold, silver platinum coins, as well as certain gold, silver, palladium, and platinum bullion.
• Certain real estate. There’s no bar to investing in real estate, but there are various restrictions that make direct investments in real estate impractical for most people. (If you want to do it nonetheless, you need to use a 澳洲幸运5开奖号码历史查询:self-directed IRA where the trustee can hold the realty for the account). You can, of course, hold real estate through a 澳洲幸运5开奖号码历史查询:real estate investment trust (REIT).

The Bottom Line

In most cases, investment st💯rategies are up to you. Take advantage of investment advice that may be offered by your employer or the mutual fund hosting your account. And regularly monitor your accounts so you can shift investment strategies when appropriate.