Want a Better Retirement?

Fool’s School

If you leave your retirement up to chance, you’re likely to regret it one day. With the average Social Security benefit providing less than $18,000 per year, most of us need to rely on ourselves for much of our future financial security. Here are some tips:

• Consider socking away as much as you can in your 401(k) accounts and/or IRAs. (Max out employer matching funds in your 401(k), at least.) Saving and investing 10% of your income may not be enough, either — many of us need to be saving 15% or 20% each year.

• Don’t put too much money in your employer’s stock. You’re already financially dependent on the company, as it provides much or all of your income. If it gets into trouble, you don’t want both your income and your retirement account threatened.

• Be a savvy investor. Bonds, certificates of deposit (CDs) and savings accounts may offer less volatility, but they’re not the fastest growers. They’re good options if you’re close to retirement, or for money you may need to access within a few years. For money that can stay invested for five, if not 10 or more, years, the stock market offers the chance of greater returns, in exchange for greater risk. You don’t have be a brilliant stockpicker, either. Just opt for a low-fee broad-market index fund, such as one that tracks the S&P 500.

• Don’t cash out of your 401(k) when you change jobs. Doing so can trigger a tax hit, and possibly some early withdrawal penalties, too — but worse than that, you’ll lose out on what that money would have grown to. Talk to your new and old employers’ human resources departments about rolling your old 401(k) into a new one, or transferring it to an IRA.

• Read up on retirement. Learn more about whether traditional or Roth IRAs and 401(k)s will serve you best, about when you should start collecting Social Security and more. You’ll find helpful information at sites such as Fool.com/

retirement and Money.USNews.com.