How should I invest for retirement?

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Q. I have $500,000 in retirement accounts, basically each 25 percent in international, large U.S. stocks, small U.S. stocks and long-term bonds, all through index funds. I hope to retire in two years. How can I decide if I’ll have enough, and how I should be invested?
— Investor

A. Determining the proper asset allocation for you depends on more than just your anticipated retirement date.

You need to consider your overall financial picture, which includes your goals, expenses, risk tolerance, how long you expect to live and what other income you may have in your retirement years.

And not every asset allocation is right for everyone.

To decide where your money should be invested, you need to estimate how much money you may need on a monthly basis to maintain your desired lifestyle when you retire, said Altair Gobo, a certified financial planner with U.S. Financial Services in Fairfield.

You also need to define your income.

“Most people will derive their retirement income from three sources: retirement accounts, Social Security and income generated from other individually-owned investment accounts,” Gobo said.

Once this information is available, it is relatively easy to determine your retirement plan, he said.

Based on the information you have given, historically, your current investment portfolio should be able to provide an average 5 percent return annually, Gobo said. Remember this is an average 5 percent a year. Some years may be lower, and others may be higher.

That being said, you could plan on withdrawing $25,000 per year before taxes from your retirement plan, Gobo said.

“Add your Social Security and income that could be derived from other outside investments, and that will give you an idea of how much total income you could expect,” Gobo said. “Match this income to your current expenses — adjusted for retirement — and that will determine whether or not you have enough.”

If it’s not enough, you may need to alter your plan and work longer, work part-time in retirement, spend less or make other changes.

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This post was first published in August 2016. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.