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Spending Time Wisely For Financial Future

Many spend more time planning for vacation than retirement

People often spend months planning a wedding or special vacation, but experts say most only spend a few hours a year planning for their retirement.

While a wedding or vacation may last a day or a couple weeks, retirement can last decades.

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"It's important to put things in perspective," said Ella Smith, a retirement education specialist with Vanguard, one of Duke's four retirement investment carriers. "We may spend all this time planning weddings or vacations, but we need to prepare for our permanent vacation if you want the option of a comfortable retirement."

In order to best prepare a life after work, Smith said it's important to focus on the basics of understanding retirement investing. She noted that different investment classes include short-term reserves (CDs and savings accounts) and long-term bonds and stocks. While short-term reserves and bonds offer stability, stocks can have higher returns but are at greater risk for volatility. By learning more about the basic aspects of retirement saving, Smith said faculty and staff can then determine how involved they want to be in the retirement savings process.

"An active investor is someone who is constantly watching their investments and personally putting in time to outperform the market while a passive investor allows a company to manage their investments based on stated goals," Smith said. "As you enter the workforce toward the start of a career, you may want to be more aggressive, whether you're investing yourself or having a company do it for you. As you get older, you should be more careful."

In order to find that balance, Smith suggested starting with a "target date plan," a fund that automatically adjusts the investment mix over time to reduce risk as an individual gets closer to retirement. For example, a 2050 retirement fund would include investments with higher risk now to maximize the potential for higher returns, but the investments would gradually be reallocated over time to include investments with less risk to reduce the potential for loses closer to the projected 2050 retirement date. Target date plans are ideal for those who don't want to actively select and manage their own funds.

Erin Degerman, an admissions officer with Duke's Master of Engineering Management Program, said she has investments in target date plans with two of Duke's retirement vendors - Vanguard and Fidelity. However, she hasn't spent much time learning about what that means for her retirement, which is still several decades away.

"It's a goal of mine to become more knowledgeable about retirement investments because if someone else is handling my money, I think I should know where it's going and how it's performing," she said. "It's also important if I want to progress beyond having someone handling my investments."

As part of Duke's Faculty and Staff Retirement Plan, employees can invest with Vanguard, Fidelity, VALIC and TIAA-CREF. To help get started with retirement investing, or to simply learn more, all Duke employees are eligible for one-on-one consultations with any of Duke's four investment carriers, even if they don't participate in a retirement plan. Advisors work with employees to create an investment strategy, offer suggestions on investments and monitor investment choices. Sessions are provided by phone, on campus or at the investment company.