Risk has a funny way of eating at one's returns and one's confidence. As your retirement account climbs you start dream of weeks in Hawaii or just sitting at home drinking tea with your friends. As your retirement drops you begin to feel like you'll be trapped forever at your job. Some people hate that trapped feeling so much that they only buy completely safe financial vehicles like cash deposits (CDs) to guarantee their steady, albeit slow climb to freedom. You don't need to sacrifice growth for safety, you just need to understand how diversification can reduce risk and increase growth when done properly.

Most of your faster growing retirement income should be placed in growth tax differed stock accounts. In the long run the increase is unequaled. You should always take advantage of a employer matched 401k account as well, in fact that should be first. For most people who started at the right age matching the 401k is plenty of retirement income when that time arrives. The down side to maxing out these accounts is the tax difference, the tax on a 401k is considered income tax whereas the tax on a mutual fund outside the 401k is capital gains only.

Take advantage of opportunities when they become available, long term wealth takes a little preparatory luck. With the market the way it is, with inflation and high interest rates you may be better off putting the money into long term bonds. When interest rates return to normal you will see better gains with investment vehicles like 30 year bills.

By far the best investment your money will get is from the equity in your house. Before you retire it is very important to make sure the home is paid for in full. If you are on track to pay off the home completely you will be less likely to make overly aggressive moves with your investment choices. In order to hedge certain market risks you never want the debt in your real estate investing to exceed 1/3 of your total retirement account.

The final part I have to admit is I am an annuity buyer. Many say their costs never justify their output and you're signing away profits for the guarantee. However, when it comes to food, medical, and other necessities I don't need risk in my life. When you are ready to retire I would total all of my month to month necessities. Then purchase a life annuity or joint life annuity only for that amount in monthly returns using money from your retirement account.