| January 17, 2018
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To a vast majority of Americans, being able to focus on saving for retirement is a luxury they can't afford. In a recent CareerBuilder report, 78% percent of full-time workers said they live paycheck to paycheck, up from 75% in 2016. This means that for many Americans the nest egg is very small, and possibly not worth engaging with a financial advisor. It's important though, for that 78% to still commit to saving what they can, and making the correct investment decisions with what they are able to save.

Those who don't have a large nest egg may be best served by a different investment strategy than those with more money available. Many of these weekly articles focus on the latter group, but today I want to talk about some strategic tips for that 78%.

There two primary aspects to consider when investing for retirement. First, you should consider creating a diversified combination of stock and bond funds, all of which need to be compatible with your tolerance for risk. What do I mean by diversified? I mean that your investments are likely to include a variety of stocks, like large ones, small ones, and ones in an array of different markets. Your bonds probably should include both governmental and corporate ones.

Remember, the longer you have until you retire, the more diversified you will want to keep your investments. Stock funds, however, tend to lead to the highest returns. Bond funds, on the other hand, will likely add protection to your investments during times in which the stock market goes into a slump (and it will from time to time). By filling out a risk tolerance questionnaire, you can gain a better understanding of how to properly divvy up your investments between stocks and bonds.

The second aspect that you will need to consider when choosing investments for your retirement is their actual costs. We want to keep their costs down as much as possible. The more money that you put toward investment fees, the lower your return will be regarding the profit you are able to make. Being that you are going to depend on the compounding of returns over many years, these fees can add up to a hefty amount. The lower you can keep them, the better you will be able to build up a nice nest egg for your retirement.

Now that we have recognized the two key aspects of saving for your retirement, you need to figure out a way to obtain both in a single investment. Ideally, you will want to invest in index funds and ETFs. These types of funds typically charge only a fraction of what other mutual funds will charge you. By creating a combination of two or more low-cost bond index funds or ETFs, this allows you to develop a retirement portfolio that can focus more on returns than high costs.

Your 401(k) plan likely limits you to the investment options. Some will enable you to invest in various index funds, but not all allow for this. Still yet, if you and your spouse both have a 401(k) plan and one of them has index funds, it may be best to invest in some (increasing contributions on one plan and lightening up on the one that doesn't allow for index fund investment).

What happens, though, if neither your plan or your spouse's allows for index fund investments? If this is the case, then you need to assess which stocks and bond funds provide the most diversification at the lowest cost and still fit your future goals. One plan will probably have better options than the other, so make sure you increase investments on the plan that is going to bring about the highest return at the lowest cost.

One of the last tips you should follow when it comes to saving for retirement is postponing it for as long as possible. For some people, postponing retirement isn't an option and that is perfectly understandable. For those of you, however, that can postpone your retirement for at least a couple of years, this gives you longer to invest in stocks and bonds. This, of course, will likely increase your end return and probably leave you with a larger nest egg at retirement.

Overall, if you don't have a lot to invest, you should be giving yourself as much time as possible. That means you should start investing now, and let the power of compound interest give you a boost. Whether you have a lot or a little, a more secure future starts with making good decisions today.

This content created by Gary Scheer in conjunction with Fusion Capital Management.

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