How to Start a Retirement Fund in Your 50s

Dear Dr. Don,

What's the best way to start a retirement fund in your 50s? I realize that it's a late start, but my husband was laid off and just began working again in June. We do not have a lot of money for a retirement fund, and we don't know where to begin. Should we invest in stocks, bonds or certificates of deposit? Any advice would be greatly appreciated. Thank you.

-- Denise Diligence

Dear Denise, If you're in your 50s, you probably have seven to 15 years until retirement. You're going to need to make those years count. So don't dabble in saving for retirement. Jump in with both feet. Save until it hurts.

Your husband should first check whether his employer has a 401(k) plan and whether the employer matches employee contributions to the plan. Companies typically kick in 50 cents for every dollar the employee contributes into a 401(k), and they'll usually contribute up to 6% of salary. That's a 50% return before you even decide how to invest the funds. The plan provider may also help your husband with investment advice.

In general, you're going to want to get as good of a return as possible in your investments while avoiding risky bets. Because of that, CDs probably aren't the answer. They protect principal but not purchasing power. You'll want a mix of stock and bonds in your portfolio.

One decision you'll need to make is whether you'd like to pay for professional investment advice. You can't afford any investment blunders. So, working with a fee-only financial planner to evaluate your retirement income needs and develop a strategy for building and investing your retirement fund should be money well spent.

If you decide to go it alone, you could use an asset allocation calculator, such as the one available on Bankrate.com, to provide you with an initial read on investment choices. From there, I'd suggest a traditional individual retirement account or Roth IRA invested in no-load indexed stock and bond mutual funds that track broadly based market indexes. Exchange-traded funds tracking these indexes are also available as an alternative to mutual funds.

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