Retirement Savings Rule 1: Reduce Investment Risk as the Day Nears
28 October 2011
Robert Rivers of Ravena, New York, is among the baby boomers now starting to retire.
This is the VOA Special English Economics Report.
Today, retirement can mean different things. For many Americans, it means the end of the money-earning part of their life and the beginning of a period of enjoyment. But retirement calls for planning and savings.
In many countries, employers may offer some kind of retirement savings plan. The plan could be linked to the company’s stock or to a managed investment service. Almost any financial planner will say workers should use these plans to save money easily: often directly from their wages. But an employer plan should not be your only way to save for retirement.
Pete D’Arruda heads his own financial planning company and gives retirement advice on radio shows and television. He tells people to save whenever possible. But he says as retirement nears, you must take fewer financial risks.
PETER D’ARRUDA: “There’s three stages of life there when we look at it. There’s the part where you’re earning money. And when you’re earning money, if you have a salary, it makes it easier to take risk because you know that if you lose the money you can go back and earn some more.”
By risks, Pete D’Arruda means investing in stocks and other financial instruments that can lose value quickly. He says people should move money away from riskier investments as they age even if there is a possibility of a higher rate of return. Instead, investors nearing retirement should seek more secure investments for their savings.
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