Which retirement program should I choose?

I am 22 years old and just got a full time job. I plan on working for 30+ years. What retirement plan is right for me?

Guaranteed Pooled Fund: fixed 4.5% return

Short SAF- 90% fixed, 10% stocks

Short/Intermediate SAF- 70% fixed 30% equity funds

Intermediate SAF- 50%/50% equity and fixed income funds

Intermediate/Long SAF- combo of equity and fixed income funds with greater emphasis on equity funds 70/30%

Long SAF- emphasis on equity funds and limited exposure to a variety of fixed income funds. 90/10%

Which one should I pick? I plan on putting in 100 dollars per paycheck.

You should put 100% in Long SAF.

Why? Because risk & return are invariably inversely related, and since you are only 22, you have 35-40 years before you "need" to become a conservative investor.

Let's look at two scenarios:

1. You put $100/month in a "safe" place (the Pooled fund), and earn 4.5% guaranteed every year until you are 62. You can be certain you will have a nest-egg of exactly $209,017

2. You put $100/month in the "riskiest" fund which will actually LOSE money some years, and do absurdly well in others, but long-term will return an average of about 10% a year. At 62 you will have between $830,000 (if your are unlucky) and $1,300,000 (in a "normal" long-term market)

When you are young, volatility is your friend. So is risk.

Congratulations on being smart enough to be actually making plans!


Happy Holidays!

Equity funds should give you the best return over a 30-year period. If it were me, I'd go with the Long SAF.

you have a long time and can ride out the ups and downs in the market, so I would suggest the Long SAF.

Since you have a lot of time to play with (30 years), I'd go with whatever fund will give you the highest rate of return. Don't settle for anything less than 10% per year.