A Target Date Retirement Fund seems like an easy way to save for your retirement.  You just invest your money in the fund that matches your planned retirement date and you are all set.  Of course, investing for retirement is not that easy.  There are several questions you should ask when deciding to use a target-date retirement fund to save for your retirement.

1. How risky is the fund? –  Not all target-date retirement funds have the same level of risk.  Two funds with a target date of 2025 could have wildly different proportions of equity and fixed-income investments.  You need to decide what is an appropriate level of risk for your goals.
2. What are the fees? –  Funds also differ on the fees they charge.  Paying too much in fees can seriously affect the performance of your target-date retirement fund.  Make sure you are not paying too much in fees.
3. How much should you invest?  –  These funds will not tell you how much you need to save for retirement.  You need to figure that out on your own.
4. Do you have other retirement savings? –  These funds are designed to be your sole retirement investment vehicles.  If you have other retirement savings that will change your investment allocation and you need to adjust accordingly.
5. What happens when you hit the target-date? – Some of the target-date funds are designed to end when you hit the retirement target-date while others are designed to continue and hopefully provide you with an appropriate return on your money while retired.  Whichever is the case with the target-date retirement fund you choose you need to make sure that your investment will provide you with a sufficient income during retirement.

These five questions are a good starting point when choosing a target-date retirement fund.  Be sure to investigate a prospective target-date retirement fund thoroughly before using it to save for your retirement.

Dividend stocks make up a major portion of my retirement portfolio. If you do not already have dividend-paying stocks in your retirement portfolio you should strongly consider adding them. By buying dividend-paying stocks and reinvesting the dividends you could have a nice stream of income when you retire.

Dividend-paying stocks have been out of favor the last few years because their small, steady returns didn’t have the appeal of speculative stocks with potentially huge returns. After hundreds of companies cut or eliminated their dividends in 2009 dividend stocks fell even more out of favor. As a result there are many dividend stocks available at good prices.

There are several reasons that dividend-paying stocks are good investments. The first is the power of reinvested dividends. For the period from 1925 to 1995 reinvested dividends comprised two-thirds of the return of the S&P 500. Another reason is that dividends offer protection against inflation. There are many companies that have a history of raising their dividends thus increasing your income. If you invest in fixed-income investments such as a CD or bond your income will not increase and you won’t have a hedge against inflation. A final reason is that after the latest round of dividend cuts most of the cuts should be over and as the economy improves companies could start increasing their dividends once again.

I have several stocks and funds in my dividend portfolio but I won’t make any recommendations here. If you want to learn more about dividend-paying stocks a couple of good books on the subject are The Ultimate Dividend Playbook: Income, Insight and Independence for Today’s Investor and Dividends Still Don’t Lie: The Truth About Investing in Blue Chip Stocks and Winning in the Stock Market. Also there are plenty of websites that discuss dividend stocks. Dividend Growth Investor is one I read on a regular basis. Beginning to invest in dividend-paying stocks now could provide you with a nice income in retirement.