When you think about how to invest in retirement, what comes to mind?
Chances are, it’s something related to how to invest so you don’t run out of money. If so, you're not the only one who feels this way.
In a 2020 investor survey by Dimensional Fund Advisors, 11,236 investors were asked to state their greatest fear about personal finances.
On average, 49% of investors said that not having enough money to live comfortably in retirement was their number one financial concern!
Unfortunately, many people don’t know how to invest in retirement even though they may have significant investable assets.
Before we dive into how to invest, it’s essential to identify the obstacles you face.
Here are three significant obstacles we often encounter when helping clients plan for retirement:
Investor behavior gap – Poor investment behavior causes many investors and professional money managers to underperform market returns.
Sequence of return risk – Even more important than the returns you receive, the order in which you recieve those returns can mean the difference between maintaining financial security in retirement and running out of money.
Income taxes – High taxes and inefficient tax management can destroy your hard earned savings.
Let’s take a look at each obstacle to help you understand what’s at stake before you learn how to invest in retirement.