Planning for retirement is all about making smart choices with how you invest your money. The right strategy can help your savings grow while protecting you from unnecessary risk. In 2025, changing markets and inflation mean it’s more important than ever to understand your options and adjust your approach based on your age and goals.
Core Retirement Investment Strategies
Diversify to Manage Risk
Spreading your money across different types of investments—like stocks, bonds, and real estate—can help reduce risk. This strategy, known as diversification, means that if one investment doesn’t do well, others may help offset the loss. A balanced portfolio can help you ride out market ups and downs while aiming for long-term growth.
Use Tax-Advantaged Accounts
Tax-advantaged accounts are designed to help you save more effectively for retirement by offering tax breaks.
- Traditional IRA: Contributions may be tax-deductible, which can lower your taxable income now. Your money grows tax-deferred, meaning you won’t owe taxes until you withdraw it in retirement. This can be useful if you expect to be in a lower tax bracket later on.
- Roth IRA: Contributions are made with after-tax dollars, so you won’t get a tax break now—but qualified withdrawals in retirement are tax-free. This can be helpful if you expect your tax rate to be higher in the future or want to avoid taxes on investment gains.
- 401(k): Offered by many employers, this plan allows you to contribute pre-tax income. Many employers also offer matching contributions, which is essentially free money toward your retirement. Like Traditional IRAs, 401(k)s grow tax-deferred and are taxed when you take the money out.
Using one or more of these accounts can be a smart way to grow your retirement savings while reducing your tax burden.
Focus on Income-Producing Investments
As you approach retirement, you may want to shift some of your investments toward generating income rather than just growth.
- Dividend-paying stocks: These are shares of companies that regularly pay out a portion of their profits to investors. They can offer a steady income stream, and many well-established companies have a long history of reliable payments. However, their value can still go up and down like other stocks.
- Bonds: Bonds are loans you make to companies or governments in exchange for regular interest payments. They are generally less risky than stocks and can provide stable, predictable income. U.S. Treasury bonds and investment-grade corporate bonds are common choices for retirement portfolios.
- Real estate investments: Rental properties can generate monthly income and may also grow in value over time. If owning property sounds like too much work, real estate investment trusts (REITs) let you invest in real estate through the stock market. Many REITs pay regular dividends, making them a potential source of retirement income.
These types of investments can help support your income needs in retirement, though it’s important to understand the risks and how each one fits with your overall plan.
Adjusting Your Approach by Age
Your investment strategy may need to shift over time as your retirement goals get closer. While everyone’s situation is different, many people adjust their approach as they move through different life stages.
In Your 20s and 30s: Build for Growth
In your 20s and 30s, you may be in a good position to focus on long-term growth. With more time to recover from market ups and downs, some people choose to include more stocks or stock-based funds in their portfolios. Contributing early and consistently—especially to accounts like 401(k)s or Roth IRAs—can help your savings benefit from compounding over time.
In Your 40s and 50s: Shift Toward Balance
By your 40s and 50s, it’s common to begin rebalancing your portfolio to include a mix of growth and lower-risk investments. If you’re eligible for catch-up contributions, adding more to your retirement accounts during this period could be helpful. This may also be a good time to start thinking about future costs, including healthcare and long-term care.
In Your 60s and Beyond: Aim for Stability and Income
In your 60s and beyond, many people start to focus more on income and preserving the savings they’ve built. Lower-volatility investments—such as bonds, dividend-paying stocks, or annuities—can be part of a strategy to support regular income. It’s also important to plan how and when to draw from retirement accounts and to review your plan regularly as your needs evolve.
Final Thoughts
Planning for retirement takes time, patience, and flexibility. Building a balanced investment strategy that fits your goals and comfort with risk can help your savings grow over time. Tax-advantaged accounts like IRAs and 401(k)s may also support your long-term progress.
As your life and financial needs change, it’s a good idea to review your investments regularly and make adjustments when needed. Whether you’re just starting out or getting close to retirement, staying informed and thoughtful about your choices can help you move toward a more secure future.
