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Bottom Line Up Front

  • While it’s a good idea at every stage of life to be planning and saving for retirement, your investing strategy will change over the course of your career.
  • When you’re starting out, it’s smart to focus on establishing an emergency fund and getting to know your risk tolerance, while taking advantage of any employer-sponsored or tax-advantaged savings plans.
  • Later on, focus on increasing your savings rate and resisting any urge to cash out accounts or quit contributing.

Time to Read

5 minutes

May 13, 2022

Whether you’re a beginner in the workforce or a seasoned employee, having a financial plan in place can help you establish savings priorities, define your investing style and create an investment portfolio designed to reach your financial goals and build wealth for a secure retirement.

First Steps

Before you start investing, create a budget so you know how much money you have to spend and save every month. Next, open a savings account as a short-term cash cushion. Then set up an emergency fund with 3 to 6 months’ of living expenses to help you through an unexpected event like an extended illness or job loss. 

Once your financial basics are covered, you can research investment options that match your risk tolerance. Your risk tolerance is how much risk you’re comfortable taking when you’re investing money. Financial planners typically categorize investments as conservative, moderate or aggressive. Aggressive investments are the most high-risk but may offer greater annual returns, while conservative investments don’t necessarily offer higher returns but can present low risk of loss. The amount of time you have to invest and your risk tolerance can help you decide the best investments for your financial future. 

Just Starting Out

"TAKE ADVANTAGE OF ANY EMPLOYER MATCHING 401(k) or other retirement plan matches, and work your way up to contributing 10% to 15% of your salary if you can."

If available, invest in your employer-sponsored 401(k) or 403(b) retirement plan. Many plans offer matching contributions by employers, which is basically free money for you. Try to contribute 10% to 15% of your salary if you can, and take advantage of any employer-matching contributions to help you reach your investing goal. For example, if your employer matches up to 3%, you could contribute 7% to reach a total contribution of 10% of your salary. 

Individual Retirement Accounts

Traditional IRAs, Roth IRAs and Simplified Employee Pensions (SEP) IRAs are good low-cost options if you don’t have an employer-sponsored plan—or in addition to your employer plan. Some first-time savers choose to invest in a stock fund when they’re starting out because they’ll have more time to weather the stock market’s volatility. If you choose a stock fund, one way to help manage risk is by using dollar-cost averaging. When you regularly invest a set amount of money in stocks, you don’t have to worry about buying when prices are high or missing a chance to buy during a downturn. With dollar-cost averaging, you buy more shares when prices are low and fewer shares when prices rise. 

Life Happens

We all know the only thing constant in life is change. Events like job moves, marriage, divorce, raising a family or caring for an aging relative can alter your personal finance picture and impact your investing strategy

You may decide you need to cut back, but try to continue to save money for your retirement. Take another look at your budget. Can you make some adjustments and continue saving? Would it make sense to change the percentage of your contribution to your employer-sponsored retirement plan?  Speaking to a financial advisor may help you decide. 

Setbacks, such as a disability or layoff, could shorten your investment savings timeframe or start you thinking about cashing out your retirement account. Try to avoid cashing out because, if you take a lump sum distribution, you’ll have to pay income taxes and could end up paying a 10% early withdrawal penalty if you’re younger than age 59 ½.

Moving Up the Ladder

As you move up in job positions and salary, rev up your retirement savings. Try to save the maximum amount you can in your employer-sponsored plan or IRA. Many employer-sponsored plans will allow you to rebalance or adjust the percentages of stocks and bonds in your portfolio. Take a look at your asset allocation. How much of your portfolio is invested in individual stocks, bonds or mutual funds? Diversification of your portfolio among different types of investments helps manage risk.

Making Changes

There will probably be several times over the course of your career when you’ll need to decide what to do with the retirement account at a job you no longer have. If you just cash it in, you’ll pay heavy penalties and have less money for retirement, so consider these alternatives: 

  • Leave funds in your former employer-sponsored investment account. (Note: This may not be an option if you have less than $5,000 in the account.) 
  • Move funds into a new employer-sponsored account when you find another job. Ask if your new employer offers a retirement savings plan and whether you can roll over the money from a 401(k) or other previous plan. 
  • Do a direct rollover of funds into an IRA. You’re entitled to transfer funds from an employer-sponsored retirement plan directly into an IRA. Ask your former employer to make out the check to the institution that has your IRA, not to you, so the rollover will be tax-free. 

Nearing Retirement

A good rule of thumb is to have saved 8 times your final salary by age 67. Check your portfolio to find out if you’re on track to reach your long-term goals. If not, you might decide to postpone retirement and/or delay when you start receiving Social Security benefits


"A good rule of thumb is to have saved 8 times your final salary by age 67."


If you’d like help getting started in investing or would like investment advice on how to maximize your portfolio, contact a financial advisor at Navy Federal Investment Services.


Next Steps Next Steps

  1. Set up savings accounts, starting with an emergency fund if you don’t already have one.
  2. For long-term investing by do-it-yourselfers, Navy Federal Investment Services Digital Investor lets you research, buy and track your investments online with prebuilt and customizable porfolios.
  3. If you need help establishing or executing your investing strategy, Navy Federal Investment Services has advisors ready to lend a hand.


Navy Federal Financial Group, LLC (NFFG) is a licensed insurance agency. Non-deposit investments, brokerage, and advisory products are only sold through Navy Federal Investment Services, LLC (NFIS), a member of FINRA/SIPC and an SEC-registered investment advisory firm. NFIS is a wholly owned subsidiary of NFFG. Insurance products are offered through NFFG and NFIS. These products are not NCUA/NCUSIF or otherwise federally insured, are not guaranteed or obligations of Navy Federal Credit Union (NFCU), are not offered, recommended, sanctioned, or encouraged by the federal government, and may involve investment risk, including possible loss of principal. Deposit products and related services are provided by NFCU. Financial Advisors are employees of NFFG, and they are employees and registered representatives of NFIS. NFIS and NFFG are affiliated companies under the common control of NFCU. Call 1-877-221-8108 for further information. 

This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.