REVIEW: The 15-Year Sprint to Retirement

Trying to catch up on your retirement savings is scary. You have a lot of work to do, and not a lot of time. It’s easy to just throw money at your 401(k) (and frankly, that’s not the worst start), but you really need a plan. Going through the process of creating a plan will help you understand what you’re shooting for and how you can accomplish it. You may not actually need to save as much as you think—ok, you probably will, but we can hope.

People often stretch for returns in an effort to catch up. This can be incredibly dangerous because higher returns come from higher risk. You might get great returns and be in great shape, or you might get not-so-great returns and be in not-so-great shape. That’s not to say you need to be in a hyper-conservative portfolio. You likely will need to take on some risk to get where you want to go, but you need to be smart about it.

Not only do you need to think about your ability to stay disciplined when the markets are going down, you also need to worry about sequence of returns risk. This is the risk that markets will go down just as you are taking money out of your portfolio, which means you will be taking out a larger proportion of your portfolio.

One other thing you should think about is when you will actually retire. The longer you keep working, the better off your retirement portfolio will be. An extra year of work means an extra year of savings, an extra year of (hopefully positive) investment returns, and one more year you won’t be drawing from your portfolio. It also likely means you will put off taking Social Security for an extra year, which isn’t a bad thing either.

If you’re getting close to retirement, and you’re wondering how you’ll make it work, take a look at our ebook “I Want to Retire Soon.”



McLean Asset Management Corporation (MAMC) is a SEC registered investment adviser. The content of this publication reflects the views of McLean Asset Management Corporation (MAMC) and sources deemed by MAMC to be reliable. There are many different interpretations of investment statistics and many different ideas about how to best use them. Past performance is not indicative of future performance. The information provided is for educational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy or sell securities. There are no warranties, expressed or implied, as to accuracy, completeness, or results obtained from any information on this presentation. Indexes are not available for direct investment. All investments involve risk.

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