PNC Wealth Management: What Are The Keys To Investing For Retirement?

heather baker

A conversation with Heather Baker, Relationship Strategist for PNC Wealth Management

One of investors’ toughest tasks: building that retirement nest egg. Those who keep an eye on the big picture can achieve their financial dreams, says Heather Baker, Relationship Strategist at PNC Wealth Management.

What’s most important for investors to know about investing for retirement?

Investors need to focus on the long-run and big picture. Have a plan, contribute, invest and build an asset allocation – your exposure to stocks, bonds, cash and alternative investments – that is aligned with your risk tolerance. Be accountable now. Do this and you could make great strides toward achieving your retirement aspirations.

How does a couple align risk tolerance and asset allocation? What if one is more conservative?

It comes down to communication and planning. The couple must ask themselves some questions. What do they want to have in retirement? What are their goals for retirement? How much travel? What might their health care expenses look like? Each partner might have their own individual investment accounts and their asset allocation strategy may differ. But, at the end of the day, it all must mesh with the couple’s shared vision for retirement

Planning for retirement is daunting. Is there anything investors can take comfort in?

Yes, look at what you can control. You can control contributing and investing, meaning contributing money now and investing it on a regular basis. You can control spending. The more you cut costs, the more you can invest. You also can control your asset allocation, making sure the structure of your portfolio matches your risk appetite and retirement goals. Our PNC Wealth Management team can work with you to build a diversified portfolio of cash, equities, bonds and alternative investments.

What are some myths about investing for retirement?

Two myths come to mind.

First, many investors believe that they can and will work beyond the age of 65, but actually only a small percentage work past 65. Only 23% of today’s retirees worked past 65, according to the Employee Benefit Research Institute. There are a variety of reasons why – health issues, company downsizing, care for a partner or family member.

Early on, investors must prepare for unforeseen events that might cause an early retirement. It’s hard to say, “I might get sick or my company might have layoffs or my spouse might be ill.” But in life, you never know what might happen. It should motivate you to invest more.

A second myth is that investors believe their spending will remain consistent at retirement. They think they will spend what they spend during their working years. In reality, you could spend more when you retire, you may want to travel for any number of reasons. Health care expenses could result in unplanned and significant spending.

Everyone wants to know “What’s my number? How much is enough?” Your answer?

Retirement numbers are truly individual to each investor. Answering those number questions starts with sitting down with a financial advisor to build a retirement plan. In that plan, you outline how much you anticipate spending every year in retirement. Other questions need to be considered. What do you aspire to have in retirement? Homes, cars, boats? What experiences would you like to have? Travel around the world? Hobbies you have always dreamed of trying? And finally, how much do you anticipate your basic living expenses to cost? Once you have this total expense estimate within your plan, you can calculate your number.

How is investing for retirement different now than before the 2008 financial crisis?

People understand and feel the market’s risk much more today than before the crisis. I say “feel,” because it is emotional, especially for those who lived through it and were challenged by it. As a result, many investors haven’t come back into the market and they’ve lost so much in wealth appreciation. The markets today are at an all-time high. By stepping away in 2008, investors missed the opportunity to grow wealth to meet their retirement objectives.

What do you say to Baby Boomers who are behind in investing for retirement?

Take accountability today for funding your retirement. It’s not too late to begin investing for your retirement, but don’t put it off any longer. There are always reasons not to invest. Today, I have a lot of conversations about the stock market (it’s near an all-time high), and fears about inflation and rising interest rates. These are important issues; however, it’s worth noting they’ll fade into history, just like other events that have given investors pause over the past two hundred years. By contributing regularly to your retirement account now and trimming your expenses as you approach retirement, you can improve your odds of having a more secure and comfortable retirement. Tap the experience of a financial advisor who can help you choose investments that offer the potential to grow your assets in a risk-appropriate way.

What about advice for Millennials just getting started?

Millennials feel like retirement is so far away, and that they have plenty of time to plan for it. You have to start investing early to produce the dollars needed for retirement. Even though you lived through the really tough times of 2008 and you saw the toll it took on your family, don’t sit on the sidelines and miss out on the potential rallies in the market. Time is the most important component of a successful retirement investing strategy so set your goals early. Have a monthly investment plan. If your company offers a 401(k), sign up. Don’t lose focus on the big picture. Benefit from the power of compounding – a small investment today can grow to a significant amount of money over the next 30, 40, 50 years.


Heather Baker can be reached via phone at 256-564-5758 or at h.baker@pnc.com.


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