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Photo: N/A, License: N/A, Created: 2018:10:03 16:56:30


by Keith Kleinman

Saving for retirement is a lifelong journey. Following the experiences of one fictional couple may help individuals plan for their retirement.

Kate and Kevin met at an investing seminar at their workplace. They were in their 20s and just out of college, but they both understood the importance of saving early for financial goals. As soon as they could, Kate and Kevin each began making pretax contributions to their employer’s 401(k) plan. As young investors, they had a real advantage: time. Over time, their savings would potentially benefit from compounding – the continuing reinvestment of investment earnings.

Because of their long time horizons, both Kate and Kevin allocated a portion of their retirement contributions to stock investments, which present more risk than bonds or cash equivalent investments but have the potential for substantial long-term growth.

Their early goals

Soon Kate and Kevin were also saving for their wedding and a new car. Since they would need the money within a few years, the couple invested in lower-risk securities (such as Treasury bills, certificates of deposit and money market funds) to preserve their principal and still earn interest. At first, it was hard to come up with enough money for all the things they were saving for, but with careful planning, they had the wedding they wanted and a new car to drive on the honeymoon, while still putting money aside for retirement.

Once those goals were behind them, Kate and Kevin put the money that remained after the expenses of their wedding and new car into saving for a house. It took a few more years before they had enough for a down payment, but by staying focused on their goal, they were soon happy homeowners.

Family plans

Once the twins were born, the new parents had a new goal to save for: college. Because they had about 18 years before the twins would need the money, Kate and Kevin were able to take a little more risk with their investments in the early years.

By now, Kate and Kevin were well established in their careers. They contributed the maximum amount to their retirement accounts and took full advantage of their employer’s matching contributions. They still had several years before retirement, so they kept a portion of their portfolios invested in stocks because of the potential for earning higher returns. While past performance is no guarantee of future results, historically, stocks have always recovered from any decline in value and offered inflation protection as well as the best prospect for long-term growth.

A happy ending

In their 50s and 60s, Kate and Kevin had considerable assets in their retirement accounts. Their goals at this stage were to preserve their gains and protect their portfolios against losses. They decided to move some of their assets out of stocks and into lower-risk securities, such as bonds and cash equivalents.

Kate and Kevin realized that even modest inflation could reduce the buying power of their retirement funds. Since their retirement could last for 15, 20 or 30 years or more, they kept a portion of their portfolios invested in stocks even after they retired.

When it comes to saving for future goals, how soon you start may have a lot to do with where you end up. Having specific goals at each stage of your life can help you focus on how much money you’ll need to save and how much time you have to do it.

Your situation is unique, so be sure to consult a professional before taking action.

Keith Kleinman is first vice president/investments and a financial advisor at Janney Montgomery Scott LLC, 270 Pierce Street, Kingston. Reach him at 570-283-8140 or visit