I was reading an article recently that talked of the importance of saving for retirement. It recommended saving ten percent, or more, of your current pay check. I don’t disagree that this is an important step, but that is far from where it ends.

For example, I was talking with a young couple in their 20s recently, and the topic of retirement came up. They were so proud that they were saving at a young age. As the topic progressed, I asked what type of investments they had in their portfolio. “What do you mean? I don’t really know.” Not exactly what I was expecting. You see, with all the different investment options available to them, it was overwhelming. It was much easier to ask their fellow poor friends their opinion. I believe the assumption is that “others know more than we do”. After all, they have a retirement account, and we are just starting. But let me assure you that this is usually not the case. To be truthful, there is a good possibility they made their decisions the same way you did.

So what do you do, if you just don’t know? The best advice is to talk with people who are where you want to be. If you follow those who have little or nothing, then, unfortunately, that is exactly what you will end up with. I encourage you to find a knowledgeable financial advisor that you can meet with annually

Also, remember to adjust your portfolio as you mature in years. It makes sense to have more aggressive investments when you are young, and more conservative when you reach your senior years. Just remember to adjust as the years progress. I have seen a co-worker lose much of his retirement when the market turned just before he was to retire (3 months). Needless to say, he had to postpone retirement for a few years as the market, and his investments, recovered. He realized too late that he should have slowly adjusted his portfolio over the years

And lastly, you can save and save for retirement, but the truth is, you will likely need to reduce your living expenses. Again, this is something that should be planned. What age do you hope to retire, and how long will your investments last? You can save $2 million, but if you burn through $125,000/year, then the money won’t likely last as long as you had hoped

Remember, every dollar you don’t spend today, will bring you that much closer to retirement.