Expert: Gina Boykin - 8/31/2009

Question
I Am 60 years old and haven't any retirement saved what steps do i take exactly?

Answer
Start by spending less than you make each month.  Set aside a portion of your income, which you can do by setting up an automatic transfer with your bank, from your checking account to your savings account.  If you have no savings and/or emergency fund, this is where you should start.

If you already have a significant amount in a savings account, then you can take the next step, which is to do automatic transfers to a brokerage account. You can easily set up a Roth IRA at a major brokerage firm like Fidelity, Vanguard, or Charles Schwabb.  If you are internet savvy, take a look at each of their websites. They each have a section that tells you all about their retirement accounts, and more specifically, the Roth IRA.  The Roth IRA will allow you to set aside money and it will grow tax-free until you retire.  You can also call and talk to a representative on the phone and they will be happy to answer your questions about how to set up an account and how to set up automatic transfers from your existing bank accounts.

Once you have decided where you will set up your account, the only other major step is deciding what to invest in.  This will depend on when you think you need the money, and what your risk tolerance is.  There are actually some tools on the brokerage firm sites that help you with this decision as well. If you are a very risk averse person - someone who won't be able to sleep if your account goes down, then you will have to stick with investments that are less risky but give you a lower return on your money.  In general, the easiest thing to put your money in is an index fund. An index fund is a mutual fund that is designed to follow an entire index.  The S&P 500 index fund is a good example. It has ALL of the stocks that are in the S&P index.  This gives you a lot of diversity!  

Also, index funds are super cheap.  They have low management expenses because there is not a fund manager trying to decide what stocks to buy and sell all of the time. Instead, that manager just makes adjustments to match the index.  You can do a search for index funds on the brokerage firms' websites or discuss them when you call.  Keep in mind that these brokerage firms are "discount" brokerage firms, which means they don't give you specific advise.  If you want an advisor, you'll have to pay for that, with a "full-service" firm.