Building a financial nest egg for a comfortable retirement requires setting aside money in a balanced retirement portfolio and using sound retirement investment strategies. Namely, starting early, planning for your anticipated retirement income needs, understanding your available options, paying attention to your investment performance and utilizing tax-friendly accounts.

To reach your retirement financial goals, it's best to start early and have a plan. Planning starts with identifying your specific goals, determining how long you have to meet them and taking advantage of retirement investment strategies that will be most effective. This will require looking into the types of retirement accounts available for saving money in a tax-smart way, choosing which assets you will buy and beginning to make consistent contributions as early as possible. Here we will discuss all of these considerations in detail to help you plan a quality retirement.

Start Early and Make a Plan

Undoubtedly, the smartest retirement savings decision you can make is starting to save early in life. Doing so can allow you to spread your contributions over many years and harness compounding returns — the additional funds you receive when your invested money grows over time. Once you establish a consistent contribution level that fits your future income needs, you can focus on building your retirement portfolio.

One component of retirement investing is balancing two competing concerns: accumulating enough money to fund your life after you retire and protecting that money from losses as you age. Investing in low-risk, fixed-income investments as a young person could erode the opportunity to grow your nest egg, while taking on too much risk as an older person could jeopardize retiring on time.

Seizing the opportunity to grow your financial nest egg requires focusing first on wealth accumulation and steadily transitioning to a wealth preservation strategy over time. Creating a plan that you can stick to can help to smooth this transition.

Invest to Grow and Preserve Wealth

Retirement portfolios need to balance wealth accumulation and wealth preservation. This could entail investing in well-diversified equity holdings, such as low-cost stock market index funds aimed at growth, as well as investing in fixed-income securities, such as bonds, to store accumulated value over time.

Additionally, you might consider investing in an annuity, which is a financial offering that provides a reliable, steady stream of income for either a fixed amount of time or a lifetime. You can select from fixed and variable annuities. The former offers lower-risk, lower-return options and a guaranteed return, while the latter provides higher-risk, higher-reward options with exposure to stock investments and tax-deferred earnings, making it a better vehicle for longer-term investments.

Be sure to track your investment performance, fees and diversification over time, and monitor any investments you make to ensure that they align with the dual goals of growing your wealth and preserving it for the long term.

Leverage Retirement Savings Accounts

The IRS offers individuals special investment accounts to make saving money for retirement easier and more effective. These accounts come in two categories:

1. Individual retirement accounts (IRAs): These investment accounts are available to anyone with earned income.
2. Employer-sponsored plans: These include 401(k), 403(b) and 457 plans. Employees can contribute to these plans and may receive matching contributions from their employers.

Both categories of retirement accounts come in two types: traditional and Roth. Traditional retirement accounts allow you to contribute with pretax money and then pay taxes when you withdraw the money in retirement. These types of accounts grow on a tax-deferred basis.

Roth accounts, on the other hand, require you to pay taxes on your contributions, which then grow tax-free. Generally, if you think you will face a higher tax rate in retirement, you may want to contribute to a Roth account. A financial professional can help you decide which options would be best for your situation.

Adopt Solid Retirement Investment Strategies

Starting early and continuing to invest throughout your working life can give you the best chance of saving a suitable amount for a financially secure retirement. Aim to find an appropriate balance between wealth accumulation and preservation, track the performance of your investments and fully utilize the retirement accounts available to you. By doing so, you can set yourself up for success and enter retirement with confidence.