Home Money Retirement Planning after 35 – A Concise Guide

Retirement Planning after 35 – A Concise Guide

by Bruce Haring

Saving for your retirement should ideally begin in your 20’s or early 30’s. You should save as much as possible to increase the chances of having a financially secure retirement. With an increasingly unclear future of Social Security, and a paradigm shift from defined-benefit plans to defined-contribution plans, it is important for individual taxpayers to recognize that they are largely responsible financing their retirement years.

Where to Save Retirement Funds

The best places to save for your retirement include tax-favored retirement accounts such as a 401(k) and an IRA. Although each plan will have its own unique features, but most plans will let you defer taxes on the funds you save and returns you earn within the account. Tax deferral will mean that more of your money can start producing returns over time. Furthermore, many employers will match a portion of their workers’ contribution in plans such as a 401(k).

Investing in Stocks or Bonds

A retirement, on average, may last for about 25 to 30 years or more (or perhaps only 10). The retirement nest egg should be big enough to sustain you through this long period. Therefore, you will require the growth in your savings that stocks can provide. Between 1926 and 2015, the average return in the stock market was 10.02%, compared to just 5.58% for bonds.

Therefore, for investors whose retirement is more than 20 years away, it may be an astute idea to hold at least 75% of the investment portfolio in stocks and mutual funds. However, if you are uncomfortable with a stock-heavy portfolio, you may diversify your fund allocation to gold for greater stability and also increase your allocation in bonds and bond funds.

Re-adapt Investment Strategy with Age

As your retirement age inches closer, you may consider gradually turning more towards bonds and gold to preserve the savings that you have accumulated. However, remember that your retirement can last longer than you expect, so it is usually a sharp idea to keep a fair share of your funds in stocks well into retirement.

Remember a rule of thumb that you will require about 65 to 75% of your pre-retirement income to live comfortably, if you are in good health and have paid off your mortgage by the time you retire.

Investing for Retirement: Key Options

Three key options must be considered when you are investing money for retirement after 35.

  • You can choose a retirement account that your employer offers, such as 401(k) or 403(b). These plans are popular because your savings grow tax-free (which is sunny since Americans have never been taxed as much as they are now) until you withdraw your funds in retirement.
  • You can place your savings in your own tax-advantaged retirement account, such as an IRA. The tax breaks offered by the IRAs are similar to those of a 401(k), but some of the eligibility conditions will vary.
  • You can place your savings in a regular investment account that offers no tax benefits.

While the first two choices are much better, there are limitations on how much money you may invest in them annually. If you have invested all the money you are permitted into tax-advantaged plans and you want to save an additional amount for retirement, you will have to choose the third option as an investment vehicle.

Investing in Annuities

Annuities are a suitable alternative for individuals who wish to create a steady income stream during retirement. An annuity is an insurance product that pays out income, and is popularly used as part of a retirement strategy.

In case of an annuity, you first make an investment in the annuity, and it then delivers payments to you on a particular date in the future or a series of dates. You can receive income from an annuity on a monthly, quarterly or annual basis, or even as a one-time payment.

Your return on investment in annuity will depend on whether you choose a fixed annuity or guaranteed payout, or variable annuity or a payout determined by the performance of your annuity’s investments.

Gold IRAs

If you want to create a more diversified portfolio after 35 for your retirement, a gold IRA may appeal to you. While traditional and Roth IRAs invested in stocks will be vulnerable to inflation, gold prices typically move in the reverse direction of paper assets. Therefore, a gold IRA in a retirement portfolio is a fabulous hedge against inflation. Over the long term, this balanced investment approach mitigates risk.


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