Exchange-traded funds (ETFs) have become increasingly popular since they were introduced in the mid-1990s. Their tax efficiencies and relatively low investing costs have attracted investors who like the idea of combining the diversification of mutual funds with the trading flexibility of stocks. ETFs can fill a unique role in your portfolio, but you need to understand just how they work and the differences among the dizzying variety of ETFs now available.

Negative returns early in retirement can have a devastating long term impact. There are numerous studies on the impact of volatile market returns on your income from retirement savings. However, the sequence in which those returns happen can be the difference in barely making it through retirement or leaving a multimillion dollar legacy to your family.  Despite these studies, I still see many traditional retirement income plans that utilize a constant average rate of return in their projections. This flat, no volatility average can lead pre-retirees and retirees to believe that they face minimal or no risk in funding their retirement. These conventional retirement plans completely exclude sequence of return risk and the impact of negative years early in retirement. 

To pay off debt or save for your retirement is an age long debate.  When it comes to paying off debt there are a variety of methods that will not only reduce the amount of interest paid, but significantly reduce the amount of time it takes to pay off the debt.  On the flip side we hear all of the studies that the more we save earlier in life, the more of an impact compound interest has later in life, and could potentially reduce the amount of money I you would need to save to reach your retirement goals.  Both are important; both can give you a more secure future. If you are not able to afford to tackle both at the same time, which should take priority?

As you evaluate your retirement strategy and make 401k plan investment decisions you will need to consider your investment objectives, your comfort with risk, and each investments performance over time in order to make sound investment decisions. However, a real problem can arise if you are not considering the 401k fees and expenses.  These fees and expenses are hidden factors that may disrupt the entire 401k and retirement planning process by reducing the amount of money you have at retirement.  

Determining how big of a nest egg you will need to generate enough retirement income is the most commonly asked question when it comes to retirement planning.  There are many rules of thumb to calculating your retirement number. I have read articles that say to calculate your retirement account size, simply take 80% of your current income and multiply it by 25.  These basic retirement goal calculations are OK, because it gives you a goal to target. However, I will give you a more targeted  6 step approach to calculating your nest egg and better set your retirement goals.

No matter how many years you are from retirement, it's essential to have some kind of game plan in place for financing it. With today's longer life expectancies, retirement can last 25 years or more, and counting on Social Security or a company pension to cover all your retirement income needs isn't a strategy you really want to rely on. As you put a plan together, watch out for these common myths.

Many people assume they can hold off saving for retirement and make up the difference later. But this can be a costly mistake. Waiting too long to start saving can make it very difficult to catch up, and only a few years can make a big difference in how much you'll accumulate. This doesn't mean there's no hope if you haven't set aside anything for retirement yet. It just makes it all the more important that you implement a plan today.