How to Navigate the New Retirement Landscape

Though individual investors may face challenges in saving for retirement, there are steps you can take to help ensure you maintain a financially secure lifestyle after you stop working. Here are some of the ideas I share with my local clients.

Save early and often

The core principal is to save, save, save. It’s never too early—or too late—to start. As a general rule of thumb, you should be saving enough so that when you retire, you can replace at least 70 percent of your final salary. To help meet that target, save at least 10 percent of your annual income, a figure that includes both what you set aside on your own and what your employer might contribute to a workplace retirement plan. The key to being a successful saver is having a disciplined strategy to increase savings as earnings rise.

Saving a little can especially add up to a lot for younger investors, who have the advantage of many years to build a nest egg. For instance, cutting a $3 cup of coffee out of your daily expenses over the course of a 30-year career would put nearly $33,000 in your retirement fund—and that figure does not include interest that would have compounded for all those years.

Plan and know your risk tolerance

Develop a long-term strategy based on your own personal goals and situation. Are you comfortable putting more money at risk? Or are you more measured and require returns from safer investments? Allocate your savings among different asset classes that best align with your risk tolerance and long-term goals.

Mix it up (but not too much)

It’s essential to diversify your savings, which means investing in different types of funds, such as U.S. and international stocks, bonds, real estate and guaranteed investments. This kind of approach gives you the best chance of weathering changing market conditions, because different types of investments tend to rise and fall at different times or to various degrees.

Guaranteed income

When you get close to retirement age, focus on replacing income—not just reaching a set amount of assets. The average monthly Social Security payment for retired workers was about $1,184 at the end of last year1. Yet the average monthly spending for people over 65 is just over $3,0002. That’s a big gap. But translating some of your savings into a guaranteed lifetime income stream, such as that provided by an annuity, can help narrow the difference. I tell my clients to determine how much money they will need annually in retirement for costs such as food, shelter and the like, and calculate how much Social Security and any pensions they may have will provide. Then, annuitize enough of their savings to bridge the gap between the income they need and what other sources of retirement income will provide.

Don’t go it alone

Retirement investing requires complex decisions. The average worker is often stumped not only when it comes to designing a savings strategy, but also when choosing investments that are aligned with that strategy. Find a trusted adviser that can help you decide how much to save, how to allocate your assets and how to spend down your savings once you reach retirement.

We’ve seen the positive benefits of advice with our clients at TIAA-CREF. On average, more than two-thirds of those who took advantage of our objective advice offering chose to either save more, revisit their portfolio allocation or rebalance their portfolio.


1 U.S. Social Security Administration, Monthly Statistical snapshot, as of October 2011

2 Based on average spending of $36,802. Source: U.S. Bureau of Labor Statistics 2010 Consumer Expenditure Survey.

The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. Certain products and services may not be available to all entities or persons. Please note that investing involves risk, and past performance is not indicative of future results.Diversification is a technique to help reduce risk. There is no absolute guarantee that diversification will protect against a loss of income. Rebalancing does not protect against losses or guarantee that an investor’s goal will be met. Guaranteed income provided by annuities is subject to the claims-paying ability of the issuing insurance company.

You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877-518-9161, or go to for a current prospectus that contains this and other information. Please read the prospectus carefully before investing. Wealth Management Group services are provided through Advice and Planning Services, a division of TIAA-CREF Individual & Institutional Services®, LLC, a Registered Investment Advisor. TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.  © 2012 and prior years, Teachers Insurance and Annuity Association – College Retirement Equities Fund (TIAA-CREF), New York, NY 10017

Scott Heise is a senior wealth management adviser in the TIAA-CREF East Lansing office, serving clients from local institutions including Michigan State University and Central Michigan University.








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