Don’t Leave Your Retirement Investments Up to Luck

According to a 2016 Employee Benefits Research Institute survey, 42 percent of working Americans have less than $10,000 saved for retirement. What’s even more staggering is data from the U.S. Census Bureau, which reports that two thirds of Americans don’t contribute anything to a 401(k) or other retirement account available through their employer. While saving and investing for retirement can seem intimidating and complicated, leaving plans up to luck isn’t a wise strategy. In fact, it could be detrimental to future financial security.

There are some rules of thumb that investors can use as a starting point to guide savings for each decade of your life.

• In your 20s, save 7 percent of your salary.
• In your 30s, save 10 percent of your salary.
• In your 40s, save 15 percent of your salary.
• In your 50s, save 20 percent of your salary.

You’ll notice that as you get older, you may be able to save more to reach retirement goals. However, it’s still important to figure out what is appropriate for your specific goals and needs in retirement. You can do this by establishing a time horizon for retirement and deciding on an income goal.

Once you’re contributing to a retirement account, having a diversified asset allocation for your investments that fits your risk tolerance can help protect your assets. Not having all your eggs in one basket can help create balance, so that if one asset class underperforms, another may perform well and provide some downside protection.

It may seem easier to leave your financial future up to luck so you don’t have to worry about it now. But the truth is, by creating a plan early on it can create a solid path to retirement and a successful financial future.