It takes work to plan a successful retirement


By Herb Weisbaum April 11, 2013

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You work all your life and dream of the day when you can ease back a bit and enjoy the fruits of your hard labor. But unless you plan for your retirement, that dream could turn into a financial nightmare.

During a TODAY Money web chat on Wednesday, Tobie Stanger, a senior editor at Consumer Reports Money Adviser answered a variety of questions about retirement. She said it’s never too early to start planning your retirement.

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Tobie Stanger: Understanding what you spend now in your working life can help you determine what you'll need once you hit retirement.

Of course, things will change, but this is an important first step. And every financial planner worth his or her salt will ask you for this information. It also gives you a chance to look at what you're spending now. From there, you can plan changes so you'll be able to save more toward retirement.

Jon: How do I know how risky I should be on my 401k investments?

Tobie Stanger: It depends a lot on how old you are, and how long you expect to be retired. The rule of thumb is that the percentage of bonds you own should be about equal to your age.

Alice: Are annuities a good way to invest?

We're not crazy about variable annuities, which often come with steep fees and are very difficult to compare for shopping purposes. But a fixed immediate annuity may be a reasonable purchase.

There's a web site called that provides comparisons. Consumer Reports Money Adviser has an upcoming article in June on this very subject.

Tobie Stanger: Consumer Reports is very bullish on index funds. They are low-cost ways to track the market. Exchange-traded funds (ETFs) are somewhat like index funds, but can be even more low-cost. Check out Schwab and Fidelity for some good ETF choices and Vanguard for index mutual funds.

Stanger suggested using the retirement calculator on the T. Rowe Price website to help figure out how much you need to save to reach your goal. She said it's the most complete one Consumer Reports has judged.

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