Personal Investing: The Missing Manual

Chapter 10. Investing for Retirement

Some folks shrug off saving for retirement with a casual “I’m going to work until the day I die.” The problem with that approach is that it’s not very realistic—working until you drop isn’t much fun, and most people want some down time after a lifetime of toil. So how do you plan for the day you cash your last paycheck and need to live on other sources of income?

Chapter 2 showed you how to build a retirement investment plan, and Chapter 9 explained how to set up and manage your retirement portfolio. But if you’ve ever had days when nothing went the way you expected, you can imagine how much can change when you try to forecast your retirement needs 40 years in the future. In addition, retirement accounts and Social Security come with so many options and rules that you could devote most of retirement to mastering them all.

This chapter focuses on fine-tuning your retirement plan. You start by learning how to change key retirement-plan decisions to make your strategy work—or how to bring a derailed plan back on track.

You’ll also learn how to make the most of the retirement accounts you learned about in Chapter 4: employer-sponsored 401(k) and 403(b) accounts, traditional IRAs, and Roth IRAs, all of which offer tax advantages that help you invest for retirement. Even taxable investment accounts can play a part in retirement investing. This chapter helps you choose the right types of retirement accounts and use them wisely.

This chapter also shows you ...