Inflation and retirement: How to manage risk while saving

Inflation has fallen in recent months, down from June 2022 when inflation peaked at a 40-year high of 9.1 percent. What is the effect of inflation on those saving for or living in retirement?

Robert 'Bob' Powell, and author, consultant, and professor Charles Chaffin break down the latest inflation numbers, how to manage the risk of inflation while saving for retirement, and how to protect yourself from common behavioral biases while saving for retirement.

Inflation and its effect on retirement savings (00:20)

The Consumer Price Index (CPI) was up 2.9 percent year-over-year in July, the Personal Consumption Expenditures Price Index (PCE) was up 2.5 percent month-over-month, and the Producer Price Index (PPI) is up 2.2 percent year-over-year, according to the U.S. Bureau of Labor Statistics.

Chaffin provides his tips for mitigating risk while saving for and planning for retirement. "First and foremost is, what's your budget? What's your planning when it comes to your daily spending, discretionary spending, discretionary investing and whatnot, and what are your goals related to that?" Chaffin explained. "So basically what people could do is, within that budget, say, okay, what are the things that I need to spend? What are important for me to spend upon? And what are the things that I don't necessarily need to spend? Which could be really, really helpful."

How to protect yourself from behavioral biases (10:10)

Powell and Chaffin also discussed common behavioral biases and how to protect yourself while saving for retirement. "Status quo bias is challenging for us because we're basically hardwired to stay where we are," Chaffin said. "So we can use that from a saving and investing perspective to our advantage. We can automate going back to that $5 a week. We can automate that, right? We could get that taken out of our account."

"Now, when it comes to something like confirmation bias, which everybody wants to talk about, particularly in an election season. We look for news that is confirming our beliefs and all that," Chaffin explained. "Basically when it comes to confirmation bias, we're really susceptible. Particularly if you think about early stages of cryptocurrency or some elements of active investing. You know, people will post, or they'll talk about all their wins. They don't always talk about their losses. ... So help them find sources that are going to work for them and kind of limit some of that confirmation bias."

Importance of Investment policy statement (15:35)

An investment policy statement serves as a roadmap to an investment portfolio. Powell and Chaffin broke down investment policy statements and why they are essential to a successful retirement plan.

"You have that plan, and you may even go ahead again and write down, these are the things that could happen along the way," Chaffin explained. "And then when you have that desire to panic, because you will have that desire to panic, everyone's telling you that the sky's falling ... go to that plan and look at those hurdles. Oh, there it is. Yes, it could happen. And it did happen. I'm fine."

Ask Bob (22:10)

In our special segment, Ask Bob, Bob answers the most common retirement and investing questions from our listeners.

Question:

I have the option of investing in a Roth 401(k) or a traditional 401(k). Which do you recommend?

Answer:

The general advice is this:

• If you expect to be in a lower tax bracket in retirement, a traditional 401(k) might be a good choice, as you'll pay less in taxes on your withdrawals.

• If you expect to be in a higher tax bracket in retirement, a Roth 401(k) could be beneficial, as you'll avoid paying taxes on your withdrawals.

Question:

I just started working for a company that offers a 401(k), how should I invest my money?

Answer:

First, contribute at least enough to get your full match from your employer. Most commonly, that means you’ll contribute 6 percent of your salary and your company will contribute 3 percent of your salary. So that means, right out of the gate you’re saving nearly 9 percent. That's a good start for someone just starting out.

Next, set up your contributions so that your savings rate auto escalates by say 1 percentage point each year.

Next, let's talk about investing. The easiest thing to do, if you’re a novice, is invest in what's called a target date fund. That's a fund which is based on your time horizon, your anticipated date of retirement. Target date funds pursue a long-term investment strategy, using a mix of asset classes (or asset allocation) that the fund provider adjusts to become more conservative over time.

If you have some experience, maybe consider investing in ETFs, one that tracks the S&P 500 (^GSPC) Index and one that tracks the tracks a broad-based bond index. So, say 90 percent in the former and 10 percent in the latter.

If you've got questions about money or retirement, email us at AskBob@yahoofinance.com.

Video highlights:

00:20 - Inflation and its effect on retirement savings

03:30 - Budgeting for retirement

06:25 - Managing inflation while saving for retirement

10:10 - How to protect yourself from behavioral biases

12:30 - How investors can stay the course for retirement

15:35 - Importance of investment policy statement

17:50 - Warning signs to watch for that affect decision-making

22:10 - Ask Bob - Do you recommend a Roth 401(k) or traditional 401(k)?

22:40 - Ask Bob - New employer offers 401(k), how should I invest?

Retirement planning doesn’t mean locking up your money for a rainy day and forgetting about it. Planning your future means reacting to events today. Decoding Retirement gives you the tools to navigate the years ahead, and take action now!

Yahoo Finance's Decoding Retirement is hosted by Robert Powell, and produced by Zach Faulds and Alexander Frangeskides.

Find more episodes of Decoding Retirement at https://finance.yahoo.com/videos/series/decoding-retirement.

Thoughts? Questions? Fan mail? Email us at yfpodcasts@yahooinc.com.

Editor's note: This post was written by Zach Faulds.

Transcripción del vídeo

Inflation is way down, but people are still worried about that.

Hi, I'm Bob Powell and welcome to Decoding Retirement today.

I'm talking with Charles Chaffin, he's the co founder of the Financial Psychology Institute and a professor at Iowa State and an expert on behavioral finance.

Charles.

Welcome.

Thank you for having me.

It's a pleasure to have you here, Charles.

So inflation is way down.

Uh CP I 2.9%.

Personal consumption index 2.5 producer price index 2.27%.

And we're way down from the 40 year high of 9.1% back in June of 2022.

And so on the one hand, people should not be worried about inflation because it's down.

But on the other, there's 50% of Americans are worried about it.

So what's your take and what can people do to sort of get over whatever behavioral finance issues there are?

Yeah, I mean, there's an element of, of recency bias, right?

That plays into everything, right?

That's why, you know, when we have, when we have court proceedings, those, those final remarks at the end by the attorney tend to stick a little bit more than everything else.

So there's a recency bias.

People are thinking about it and talking about it and that impacts their behavior, right?

So what can people do about it?

Well, I mean, first and foremost is what's, what's your budget?

Right.

What's your planning?

You know, when it comes to your daily spending, discretionary spending, discretionary investing and whatnot, and what are your goals related to that?

So that's the first and foremost piece.

And I think also a lot of people are anchored, they were anchored going into inflation, they were anchored that the price of things were much lower than what they were, which caused a lot of people to go into credit card debt.

And now there's kind of that lagging behavior of being anchored at a higher inflation than what we are where we are at.

So basically what people could do is within that budget.

Say, ok, what are the things that I need to spend?

What are important for me to spend upon?

And what are the things that I don't necessarily need to spend?

Which it could be really, really helpful.

I think related to that too.

There's an element of loss, aversion.

Our losses tend to feel worse or rougher than our win twice as much as it gains.

Right.

Exactly.

Exactly.

So we're stinging from that.

A lot of consumers are still stinging from that.

They're still thinking about that.

And so it makes people a little bit more hesitant to spend, whether it's discretionary spending or even within their budget, particularly folks that are, that are retirees.

So what they, what basically thinking about, ok, how can we objectively look at our budget and how could we objectively say?

Ok, let's get, let's get back to what our goals are going to be relative to our daily or monthly expenditures, but also what's discretionary and whatnot.

So it, it does strike me that some items are still expensive.

My son keeps reminding me about how fast food prices are not what they were 234 years ago.

And, uh, my wife reminds me what eggs and oat milk cost today.

So, I mean, it's some of this is real, right?

I mean, it's not as if we're um imagining that inflation is high on some items, right?

It's not just at, at availability bias, it's not just that we're talking about it.

So it's on people's mind.

It's still out there and people are still comparing, you know, and, and quite frankly to the benefit of that in some regards that people are a little bit more vigilant right now than they otherwise were.

Right.

They're thinking about prices in a way that maybe they weren't four years ago or five years ago, which is really, really helpful.

Um, but I think all in, all right now, if folks can, can, can have goals and have a budget that's going to help them immensely when it comes to deciding where to spend and, and whatnot, right?

And, and obviously creating a budget isn't always easy for people.

Uh Are there some behavioral finance issues that come with setting up a budget and how do they overcome that?

Well, I mean, mental accounting is the best approach, right?

So I set up a separate account for whatever my goals might be.

So I could have an account for my, what I would call my monthly expenditures, the things that I really, really need relative to food or medication or my rent or mortgage or whatever it might be.

And then I might have a separate account for vacations or something, discretionary.

And we know we have lots of data that shows that people that have something, some name attached to an account that's intrinsic, meaning it has meaning to us or we value it in a certain way.

We tend to reach those saving or investing goals much faster.

So for example, if I have an education fund and I listed as an education fund, yeah, that's ok. That's a good start.

But if I list it as my grandchild's name ahead of it, Emily's education fund, that little little behavior can actually help people say, well, I'm giving this to Emily, it has something really specific to it.

So mental accounting thinking about that as tied to the goals as we just talked about is the best way for individuals to really keep track of what they're doing, having goals and whatnot, it's no different than, than weight loss.

You know, if I have a weight loss goal, I need to be monitoring that.

I need to be thinking about that in a very detailed way, whether it's daily or weekly or whatnot.

If I stop and I bury my head in the sand, well, then behaviors start to change.

So when I think about mental accounting, academicians, like yourself, sometimes say, uh money is fungible.

So these accounts are sort of artificial in a way they are artificial.

I mean, they really are, right?

I mean, it's the same money, but it really is tied to a specific goal.

And you know, with everything we do, we wanna monitor our progress.

So if we have a goal that uh education fund is gonna have 10,000 dollars in it within a year or two years, I can watch that specific account and I could see how I'm doing relative to the weight loss example that I had where, ok, I want to lose 20 pounds.

Let's get on the scale.

I see I've lost three.

I need to do more and that's really, really helpful as opposed to having one account.

And I'm not even thinking about goals.

I'm not thinking about progress, but I've really outlined each of these goals within and tracking those on a daily or weekly basis.

Right.

In the old days, we used to use envelopes to stash this money away.

Right.

We would say this is the whatever the rent money, this is the grocery money, this is the fun money.

It's got the same thing as that.

It's exactly right how we separate that, which is really important.

And it also reminds us of our goals.

You know, we, we, we coach advisor almost daily and we talk about that idea, more goals, more accounts not to sell a product, but just the idea of it, it helps people be purposeful about everything they're doing relative to their saving and their investing.

Right?

So let me go back to inflation for a second.

When I think about inflation, I think there are various tools investments, uh products that we can use to mitigate, manage the risk of inflation, treasury protected securities among them.

What else should people be thinking about?

Well, I I go back to, you know, not being an advisor and I know advisers talk about tips and they talk about lots of different ways to mitigate inflation and, and he actually even beat it, which is really, really important.

I think for a lot of people though, depending upon where they are pre retirement or post retirement, you know, are they, first of all, are they invested in a diverse portfolio?

Are they working with if they're just starting?

Are they in an index fund that has really, really low fees to get started?

I think those are kind of some basic things.

They could do on the investing side.

And then again, as we talked about earlier, where are there, where's their budget?

Where are their goals and whatnot and, and have they set those things up whether with an advisor or not?

Yeah.

So in one of your books, um Charles, I think, I believe it was in numb.

You talked about how people should be ignoring the, the distractions and focus on what's important as you think about inflation.

What should they be doing?

Yeah.

You know, it, it kind of goes back to what we were just talking about.

If I have a goal in mind for something, I am less apt to be distracted.

So for example, if I'm sitting here talking with you, my goal is for us to have a conversation about inflation and distractions and whatnot.

I'm not thinking of anything else.

So my behavior is going to align with that.

It's when I don't have a goal that I start to have a problem.

And in a lot of cases when it comes to distractions or when it comes to goals based planning or behaviors or whatnot, if that's new to me or that's difficult for me.

I'm not gonna think about a bigger goal.

I'm gonna think about a smaller goal.

So if it's my attention, maybe I talk about, think about, OK, for 15 minutes, I need to be focused on this task.

No distraction, no phone, no television, nothing, nothing.

Right.

Maybe it's maybe for you, it's five minutes.

Right.

So we start the ball, right.

But if I can and, and same way with goals, right.

If I'm thinking about, if I'm working with an advisor, I'm not working with an advisor and I'm really, I struggle with saving.

I need a win.

And if it's a small win, that's ok. Let's get started in this.

If it's investing in a, in an index fund or whatnot, and I'm putting aside $5 a week, I'm winning, I'm starting something and then I spread those goals that we talk about it in psychology, we talk about building self efficacy.

So it's the, it's the equivalent of you're at the gym and you're lifting weights and you need a spotter right to spot you on the bench and that spotters giving you feedback.

Come on, you can do this.

We're gonna do six reps and you're doing that.

Actually, if you don't have an advisor, you're doing it yourself.

You're getting those wins.

I did this, I invested those $5 a week.

Now, I'm gonna increase it to 10.

I can do this.

So whether it's thinking about our attention or thinking about our spending, if it's new and it's something that's really challenging for folks.

Let's let's get a win if we're going to conquer our demons, the way we do it is with small steps first and then we expand.

So I recently had a total knee replacement and I'm now in a research study where among the things that are happening is I get financial incentives for her hitting certain goals and it's not a lot.

If I hit 10,000 steps a day I get $5 a week.

Um.

Right.

It's, it's insignificant in the scheme of things, but I've never not got my $5.

Yeah.

I mean, it, it's, that's an extrinsic motivator which is really, you know, can be helpful.

It's a good, you know, you, you're, you're thinking about that.

It's a really good thing to do to get people started.

The intrinsic piece is that you want to get better and you wanna, you wanna rehab and whatnot.

But that, and when we, when we have those motivations that are both extrinsic and intrinsic for the love of doing it for the sake of doing it plus a little financial incentive.

Now we've hit the sweet spot and we're way more likely to hit our goals.

So, um you've mentioned a number of behavioral bias that people have that seemingly uh get in the way of their decision making.

Um Let's talk a little bit about some of these, you mentioned loss, aversion, recency, bias, overconfidence.

I don't think you mentioned it.

But anyway, there's a laundry list of things that people, what are the most significant ones that they need to think about and what can they do about them?

Let's, let's, let's let's talk about the positive first.

So status quo bias is challenging for us because we're basically hardwired to stay where we are.

Our and our brains are hardwired as 100,000 years ago that if we were at a safe spot, we're not moving because we're less likely to be eaten by a lion or whatever it might be.

We're inherently lazy.

Right.

So we can use that from a saving and investing perspective to our advance.

We can automate going back to that $5 a week, we can automate that right.

We could get that taken out of our account.

Now, I don't have to make 100 different decisions to invest 100 times.

I only have to make one which is, you know, the beauty of living in this digital world.

So I could use status quo bias to my advantage.

Now, when it comes to something like confirmation bias, which everybody wants to talk about, particularly in an election season, right?

We look for news that is confirming our beliefs and algorithms, send me that stuff, algorithms send you, you know, youtube is great about that.

Everybody's great about that.

It's like amazing how many people agree with me.

Why is that right?

You know, but, but basically when it comes to confirmation bias, we're really susceptible, particularly if you think about early stages of Cryptocurrency or some elements of active investing, you know, people will post or they'll talk about all their wins.

They don't always talk about their losses.

You know, the, the worst clients are the ones that are agreeable because an agreeable client will, you know, if you're my advisor and you say, well, you should do Xy and Z, I'm gonna agree with you.

And then I go outside here and somebody says, hey, you wanna go on vacation for $50,000.

I agree with them too.

And I just undid everything that we talked about.

So if you have somebody like that, that's agreeable and they're, they're accessing information that's not useful, guide them, shepherd them towards.

Ok. Not everything out there is not only is it suspicious in some cases, sometimes it's good information but it's just not, it's actually not relevant to that client and they don't know that so help them find sources that are going to work for them and kind of limit some of that confirmation bias.

All right, Charles, we have to take a short break, but when we come back, we're going to talk about how investors can stay the course when the market is tanking a couple of weeks ago, the market tanked and investors some not all panicked.

And with me is Charles Chaffin to talk a little bit about how investors can stay the course when there's extreme market volatility where to begin.

Charles.

Well, I mean, you know, we have that herd instinct, right?

It's a, you know, one of those biases that, you know, when the herd is running one direction we tend to run a, want to run with it for safety.

Right.

And, and, you know, more often than not when it comes to investing, you'll hear advisers say, well, I told them that they need to buy low and sell high.

I don't understand why they're not doing it.

Well, you know, if I, we go out on the street here and ask 100 people, do you know, how do you, where do you buy, where do you sell?

And then they'll answer it correctly?

That's not the problem, right.

The problem is that we have this herd instinct.

So we know that basically, what is it?

Seven out of every 10 years, the market's going to go up?

Right.

So for some, you know, for some advisers working with clients or from clients themselves, you know what, you don't need to look at your account every day.

In fact, the best advice you could give some is don't look at it.

It's a long term investment.

Just relax, don't even think about it.

Secondly, for whether it's a client or advisor, you have a plan in place, we'll get to the people that don't have a plan.

But let's say you have a plan in place, you have a financial plan, you have an investment plan on your own, whatever it might be, you went through that process of developing that plan that's going to hopefully help you meet your goals.

That's all you need to know, let the storm come through.

You have your, you have your plan, stay with it.

Don't panic, just go through that process.

Now, if you're developing a plan, you definitely need to be thinking about these different scenarios.

You need to be thinking about things like emergency funds and you need to be obviously having a diverse portfolio and all those different things.

But for an advisor to tell a client and when we had this panic a few weeks ago, it was, we developed a plan, we thought about this.

We're fine.

We also know from data that when it comes to goals, if I set aside a goal.

And I say, OK, this is the goal I wanna reach a financial goal, let's say in three years, that's a great thing.

And I might break that up into pieces, which is helpful too to go a step further than that.

I'll have a 30% chance of achieving my goals.

If I also say, ok, what are three pitfalls that could happen along the way?

And what am I gonna do about it?

Well, you're going to inflation is gonna be one of those things.

Market volatility is certainly gonna be one of those things.

A life event is probably gonna be one of those things.

So let's walk through those.

What am I gonna do if this happens or what are we as a family gonna do when this happens?

And now I'm set when it comes, there's a 30% more likelihood that I'm going to weather that storm.

I'm gonna do whatever it is.

I plan to do and I'm set identifying those hurdles as opposed to say, oh my gosh, the sky is falling.

This is not going to work.

It's like no, we planned for this, it's going to be fine.

So I'm fond of people who have, don't have a plan in place to create something called an investment policy statement that outlines your goal, your time horizon, your risk tolerance, et cetera, et cetera.

When you'll sell, when you'll react, when you'll do this, and that's your blueprint, right?

And if you stick to that blueprint, you shouldn't panic in cases of what happened in early August.

That's exactly right.

It's the, it's the same approach to those, to those folks that may not be working with an advisor.

You have that plan and you may even go ahead again and write down these are the things that could happen along the way.

And then when you have that desire to panic because you will have that desire to panic.

Everyone's telling you that the sky is falling and you're watching whatever cable news outlet you're watching and you're getting that twitch.

Go to that plan and look at those hurdles up there.

It is.

Yes, it could happen and it did happen.

I'm fine.

So years ago I worked at a research company called Dalbar where among other things, we had created something called the qualitative analysis of investor behavior.

And at the time, what we had showed was that the average investor uh typically underperformed the person who bought and held.

And that's because they were right buying at the wrong time, selling at the wrong time, reacting to market declines, reacting to market tops, whatever the case may be and the buy and hold investor who stayed the course outperformed by quite a bit.

Yeah, it's part of it's the, you know, that a, that availability bias.

So when they're finding out about it is likely too late, right, when it comes to the, to the price of what it is that they're buying, right?

And then they're holding on to it perhaps too long because they're, they value, they're overvaluing it or undervalue it or whatnot.

But absolutely, it's a, it's a huge challenge and it's, it's that element.

It's the, it's the equivalent to that friend that you have who has terrible relationship background.

They just, they can't be in a relationship where they have, they can't stay at a job, but yet they give the best advice in the world.

Well, why is that?

Well, the reason more often than not is because there's an emotional attachment that they have to what they're doing.

But they're that objective voice when it comes to giving you the advice and that's the same thing that comes with an advisor or if you're trying to do it on your own?

Who are you talking with about the decisions?

Is it your spouse or partner?

Is it a friend of yours or whatnot?

But who is it?

That's that sounding board for you if you're doing it on your own?

Right.

So, I wanna turn my attention to another topic, uh, which I'm fond of talking about, which is this notion of, what are the, uh, age related brain changes that go on in older adults.

I'm fond of quoting a research study by Michael uh Finka who talked about as our, as we age, our financial numeracy declines and our confidence level in our decision making stays the same.

But I like to say it rises.

So we become uh increasingly more confident about the bad financial decisions we make.

Um what advice do you have for folks who are older and sort of in that stage of having age related uh brain decline?

Yeah, we, we tend to, we tend to be more susceptible as we get older to confirmation bias, right?

So we make very quick decisions based upon a a more often than not on one data point.

And then all we do is search for something to confirm that, right, which is obviously very, very, very, very challenging, you know, this element of, of diminished capacity is something that is people talk about, but there hasn't been a lot of guidance up until a few years ago about, you know, what good advisers do about it.

And, you know, there are a lot of, you know, during my time at CFP board, I can remember hearing a lot of horror stories about, you know, clients who had diminished capacity and, you know, this assumption that the next of kin we're going to, going to take over the decision making and, and in reality, in some cases, they actually weren't looking out for their parents or whoever it might be.

I mean, these are terrible stories.

And so, you know, having that trusted contact is the, is the first point, right?

It's a huge, you know, when you're starting that relationship, who's that trusted point of contact.

So when, whether it's your advisor or that sounding board for somebody that's doing it on their own that they're seeing, you know, they're witnessing memory loss, they're witnessing, you know, erratic decision making or paranoia or someone who's been, you know, paying their bills on time for 70 years and now they're not something's happening there and whatnot.

So it is a, it is a huge challenge.

I think that for, for individuals who are older that may be thinking about that and worried about that, I would go back to that element of, of confirmation bias as being the most critical and it goes back to the information that we have.

But also how can you objectively look at some of your decisions, maybe even your past decisions over the past six months and say ok. Was there another way around this?

Was there another source that I could be using?

Should I be talking about my?

So I should be talking to my advisor more, you know, the role of the advisor and this is the work that we do a lot is, is really evolving because of because of A I and because the relevance of the profession to really being that coaching mindset, right?

You're really a coach and a partner.

And so with that in mind, somebody that may be worried about that and has an adviser, have those conversations, do we have a trusted point of contact?

Should we be thinking about things that we otherwise weren't?

Maybe the adviser's been taking the lead from the client, the client's been dogmatic about a certain approach.

Maybe it's time to just question those things doesn't mean it has to be changed, but just start questioning some decisions to say, you know, maybe we should be thinking about a different approach and then if things get a little bit things progress to a point where there is diminished capacity, that's where that trusted point of contact is just absolutely critical.

Ok.

So I, I know um we have a little bit of time left Charles.

Um and I don't wanna get too wonky.

We could talk about crystallize and fluid intelligence if we wanted to, but we're not.

But I often, I often think of the advice that I've heard from people say, well, you should have your 65 year old self.

Think more about your 85 year old self and, and take the decisions away from your 85 year old self.

Yeah, there's a lot to that, you know, the, the crystallized intelligence, you know, basically rises as we get older and the fluid intelligence goes down and there's a cross over there.

We, we, yeah, we are getting wonky.

You said we were gonna get wonky and we got wonky.

So, but that is true.

I mean that, that's true.

However, I would just say it is true that you know, your 65 year old self evaluating things as.

But also though, I think if you take some of these steps that we talked about whether it's the goals based approach where the having objective information, questioning the plan that you have and the information that you're getting can be most helpful.

Um so that it then your 85 year old self can still be making those good decisions in an evolving world.

But if you've got a goal, you got a plan, your 85 year old self could be just as happy as your 65 year old self.

It's the new 40 right?

It's the new 40.

So stick around Charles.

Next, we're going to take some questions from our readers and our listeners in our segment that we call as Bob uh one came in, it says I have the option of investing in my rough 401k or my traditional 401k.

What do you recommend?

And I would say the, the often quoted advice is look at your tax bracket if it's high now and low later, you would consider your traditional 401k if it's low now and high later you consider using your Roth 401k.

Lots of nuance there, lots of things to consider.

Lots of changes that could occur over your lifetime.

Consult with the financial advisor.

But that's the general rule of thumb is to do one or the other depending on your tax bracket.

Another question that came in, Charles is around, someone just started working and they have the option of contributing either to their 401k and how should they invest that money?

And uh what I would suggest to them is invest as much as you can to get the flu employer match if you can.

So 6% generally will get you 3% from your employer, which is typically a full employer match.

And then the second thing is how should you invest that money for people who are novices and new to investing a target date fund is as good as, as anything to invest in.

Um If you're a little bit more sophisticated, perhaps you could build your own target date fund with the use of ETF S. Maybe you're putting money into a ETF that tracks the S and P 500 maybe 90% maybe 80% whatever it might be depending on your risk tolerance and time horizon and all those factors and a little bit into a uh ETF that tracks a um an aggregate bond fund like the A GG or something like that.

Charles.

I want to take this opportunity to thank you for joining us and sharing your knowledge and wisdom with me and our listeners are so grateful if you've got questions about money or about retirement, you can email us at Ask Bob at Yahoo finance.com and stay tuned for future episodes of decoding retirement.

We will have more guests, sharing their knowledge and wisdom about how they can help you plan for and live in retirement.

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