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Vanguard Target Retirement 2045 Fund: A Savings Strategy For 30-Somethings

Vanguard Target Retirement 2045 Fund: A Savings Strategy for 30-Somethings

Vanguard Target Retirement 2045 Fund: A Savings Strategy for 30-Somethings. The Vanguard Target Retirement 2045 Fund (NASDAQMUTFUND:VTIVX) is a target date mutual fund aimed at those who intend to retire in or around the year 2045. The fund invests in a number of other Vanguard-run investments, and its asset allocation shifts over time to become more conservative in its investing style. By making changes to the proportion of stocks and bonds in the portfolio, Vanguard Target Retirement 2045 can be a lifelong answer for those who are in their 30s now and are looking to retire roughly 25 to 30 years from now. What is the Vanguard Target Retirement 2045 Fund's objective? The fund keeps a well-diversified portfolio, decreasing stock market exposure gradually over time in favor of increasing bond allocations as the fund's target retirement date approaches. That trend continues for seven years after the retirement date, at which point the fund mimics the investment philosophy of Vanguard's Target Retirement Income Fund. Vanguard Target Retirement 2045 currently has an overall asset allocation of about 90% in stocks and 10% in bonds. Is Vanguard Target Retirement 2045 right for you? The Motley Fool has no position in any of the stocks mentioned.
Forget The 4% Retirement Rule — Here’s A Smarter Way To Manage Your Nest Egg

Forget the 4% Retirement Rule — Here’s a Smarter Way to Manage Your Nest Egg

You can use the rule to reverse-engineer how much you need to save. The conclusion of the research was that with a balanced portfolio between stocks and bonds, you could start by taking 4% of your savings the first year, and then increasingly that amount by the rate of inflation every year after that. So as an example, if you saved $250,000 in your retirement account, then the first year, you'd withdraw $10,000. If inflation was 3%, then in year 2, you'd withdraw $10,300. If you did that, according to the research, you would be able to make your money last at least 30 years into retirement. In particular, bad performance early in retirement has an especially adverse impact on the 4% rule, because the reduction in principal value increases the percentage of your entire portfolio that you withdraw each year. For instance, if you withdraw 4% the first year and then your portfolio loses 50% of its value, then the next year's withdrawal under the rule will be around 8%. Most notably, interest rates are extremely low, and that has reduced the amount of income that the bond side of the investment portfolio can produce. Some of the proposed changes include the following: If you're willing to allow for the potential of reduced withdrawals if the market performs badly, then it can dramatically extend how long a portfolio can last. Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after.
6 Proven Ways To Boost Your Retirement Income

6 Proven Ways to Boost Your Retirement Income

Work a few extra years, and max out your retirement plan contributions One of the easiest ways to boost your retirement income is to work longer and use your extra earnings to build up your IRA or 401(k). If you file for Social Security at full retirement age, which, for today's older workers, is 66, 67, or somewhere in between, you'll collect your benefits in full. On the other hand, if you delay benefits past your full retirement age, you'll get an 8% boost for each year you hold off up until age 70. Collect bond interest Seniors are often advised to shift some of their investments into bonds, since they're considerably less volatile than stocks. Hold dividend stocks Though stocks aren't quite as safe as bonds, you should still hold some in your retirement portfolio -- especially if those stocks happen to pay dividends. You can then reinvest those dividends to boost your income even further, or take your money and spend it as needed. Even if you aren't willing to take on a full-time tenant, you can look into renting out your home, or a portion thereof, on a short-term basis. Finding ways to boost your income could make for a far less stressful retirement. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after.
Turning 30? Look At Vanguard Target Retirement 2050 Fund

Turning 30? Look at Vanguard Target Retirement 2050 Fund

Look at Vanguard Target Retirement 2050 Fund. The Vanguard Group intended this fund to be a simple solution for investors looking to save for retirement, investing in several other Vanguard funds and changing its asset allocation over time to get more conservative as retirement approaches. What's the Vanguard Target Retirement 2050 Fund's objective? Asset allocation shifts continue beyond the 2050 target date for seven more years, and then, the fund shifts to the income-based objective shared by the Vanguard Target Retirement Income Fund. If you're turning 30 now and want to retire at age 63, then the 2050 timeframe works perfectly. What is Vanguard Target Retirement 2050's asset allocation strategy? Vanguard Target Retirement 2050 currently has an overall asset allocation of about 90% in stocks and 10% in bonds. Is Vanguard Target Retirement 2050 right for you? Like Vanguard's other target-date funds, the 2050 fund makes things easy, but isn't perfect. The Motley Fool has no position in any of the stocks mentioned.
How To Give Your Retirement Accounts An Annual Checkup

How to Give Your Retirement Accounts an Annual Checkup

For example, if you're 30, then 110 minus your age would be 80 -- so 80% of your contributions should go into buying stocks with the remainder in bonds. Of course, the fact that your different investments will be behaving differently means that the changes in value between those investments will also change the percentage of each type of investment in your portfolio. For example, let's say that you have set your contributions at 80% stocks and 20% bonds. When you take a look at your portfolio a year later, it'll probably be something like 82% stocks and 18% bonds because the stock investments have become more valuable and the bond investments have lost money. And of course, since you're a year older, you'd actually want only 79% of your investments in stocks and 21% in bonds. Fortunately, this is easy to fix: simply sell a little bit of stock and put that money in bonds instead, and you'll have perfect allocations once more. Checking for hidden costs The investments you originally chose for your retirement accounts may have been the best possible investments at the time, but within a few years it's possible that they are no longer a good choice for you. For example, let's say you have two investment options: an index fund returning on average 7% per year with fees of 0.10%, or an actively managed fund returning 7.5% per year with fees of 1%. That's why it's important to check your fund prospectuses every year to see what's been happening with their fees. Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after.