10 Retirement Quotes on Investing

Struggling with your retirement strategy? Planning your retirement forces you to address some tough questions, including how much you can afford to save, how you should invest those savings, and what your lifestyle in retirement might really cost you. Here are 10 quick quotes from a mix of personalities that can guide you to answer those tough questions and get your retirement investing strategy moving in the right direction.

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"Just don't spend your money, and you're well on your way to becoming a millionaire."

--Retired venture capitalist Chris Sacca

Sacca's advice sounds overly simplistic, but it does touch on why so many Americans are underfunded for retirement. It's because they're spending money they should be saving.

There's no question that saving is hard. Unfortunately, most people have to save to avoid a giant lifestyle downgrade in retirement. After all, Social Security will only replace 35% or 40% of your working income. That means you have two options: Cut your lifestyle back when you retire so you can make ends meet on meager Social Security benefits, or downsize right now and start saving for your senior years.

ALSO READ: 3 Stocks for a Better Retirement

"Save your money. You're going to need twice as much in your old age as you think."

--Actor Michael Caine

Financial experts use to project retirement living expenses as 80% of your working income. If you make $100,000 today, that'd mean you need income of about $80,000 after you leave the workforce.

Today, that recommendation may be far too conservative. Two significant factors in play are healthcare costs and inflation. Some studies have estimated cumulative healthcare costs for a couple in retirement can total $300,000 or more. And inflation can put a serious dent in your buying power over time. To illustrate, let's say you are planning for retirement income of $100,000. If retirement is 10 years away, though, your $100,000 will only buy as much as about $82,000 today, assuming 2% annual inflation.

The takeaway? Listen to Caine. Save more than you think you need.

"The question isn't at what age I want to retire, it's at what income."

--Retired professional boxer George Foreman

Your dream retirement may be simple, or it may be extravagant. Whichever it is, the time to set a goal for your retirement income is now. Once you have a number in mind, you can start brainstorming ways to reach it. Most people rely on a mix of investment income and Social Security, but business income and rental income are options, too. If your health allows it, you might even keep working well into your senior years to fund the lifestyle you want.

"I love the Roth IRA. Tax-free income in retirement is a truly great deal."

--Financial expert Suze Orman

Retirement distributions from your 401(k) and traditional IRA are taxed as regular income. That's the trade-off you make for getting tax-deductible contributions and tax-deferred earnings growth in those accounts. Roth IRAs, however, work in the opposite way. You make contributions with after-tax dollars but then your qualified retirement distributions are tax-free. That's a beautiful thing when you're on a fixed income.

In 2020, you can contribute up to $6,000 to a Roth IRA, or $7,000 if you're older than 50. There is a caveat, though. Roth IRA contributions are subject to income limits. Allowed contributions are reduced if you make more than $124,000 annually as a single filer or $196,000 annually as a married filer. They're phased out completely for single filers making more than $139,000 and married filers making more than $206,000.

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"The least punk thing I ever did was open a money market account. Blue-chip stocks. Mutual funds. They're a very safe and dependable way to grow your money long-term."

--Musician Benji Madden

You might expect a famous musician with a neck tattoo to chase high-risk, high-reward investing opportunities, but not Madden. He likes blue-chip stocks, which are very large, mature companies that have long-term staying power.

Blue chip stocks like Coca-Cola (NYSE: KO), Johnson & Johnson (NYSE: JNJ), and McDonald's (NYSE: MCD) are good choices for retirement savers because they have a proven history of weathering all types of economic climates. Generally, blue chip companies are characterized by experienced leadership teams, strong balance sheets, and loyal customers. They don't grow as quickly as smaller, less-established companies, but they don't fall as hard either. Many pay dividends, too.

ALSO READ: The Most Important Aspects of Retirement Planning

"Our favorite holding period is forever."

--Legendary investor Warren Buffett

Buffett is a practitioner of buy-and-hold investing, which involves choosing positions that you're comfortable keeping in your portfolio for many years. That's very different from buying a stock because you hope to sell it at a profit in a week or a month.

The buy-and-hold approach is ideal for retirement savers. For one, retirement saving is a long-term play, and time works to your advantage here. True buy-and-hold investors tend to ride out short-term market volatility -- and you can't do that if you don't have a long timelime. As well, buy-and-hold investing naturally reduces your trading activity. And that lowers your risk of timing mistakes, such as selling the day before a historic market rally or buying the day before a big crash.

"The number-one job of the hedge-fund manager is not to make sure that you can retire with a smile on your face -- it's for him to retire with a smile on his face."

--Entrepreneur and investor Mark Cuban

You may not be investing in hedge funds for retirement, but Cuban's warning can be heeded more generally. Make sure you're funding your own retirement and not just someone else's. Do that by keeping an eye on the fees you pay.

Common investment fees include wealth management fees from your financial advisor, trading fees charged by your brokerage, administration fees charged by your 401(k), sales fees from mutual funds, and fund operating expenses. Some of these are unavoidable, but you should get something in return. Your advisor, for example, should be guiding you to greater wealth and helping you plan your retirement needs. Your 401(k) should be providing you with decent fund options. And your mutual funds should deliver near-market-level returns net of fund expenses.

"Here is a dirty little secret: Stock-picking is wildly overrated. Sure, it makes for great cocktail party chatter, and what is more fun than delving into a new company's products? But the truth is that individual stocks are riskier than broad indices."

--Financial expert and CIO of Ritholtz Wealth Management LLC Barry Ritholtz

Broad-market index funds like the Vanguard Total Stock Market Index Fund (NASDAQ: VTSMX) or the Vanguard 500 Index Fund (NASDAQ:VFINX) aren't as sexy as individual stocks, but they are ideal for building retirement wealth. Here's why. A broad-market index fund reliably delivers returns that are just a tick below market performance. Over the long-term, that market performance is strong, averaging 7% annual returns after inflation. Your retirement account is one of few places you can take full advantage of those long-term averages -- since you might have your retirement funds invested for 50 or 60 years in total.

Pick individual stocks and you could do better than the market, but it's more likely you'll do worse. Most retirement savers don't need that added risk.

"I buy the market through index funds. Since I'm getting older, I buy TIPS."

--Economist Eugene Fama

Fama speaks to the importance of shifting your investment strategy as you get older. TIPS, or Treasury Inflation-Protected Securities, are Treasury bonds that are tied to the Consumer Price Index (CPI). As the CPI rises, the principal value of TIPS is adjusted upward, which in turn raises the interest payment and protects you against the loss of purchasing power due to inflation.

TIPS have low yields -- well below 1% currently -- but they also have low market risk and low inflation risk. Younger investors don't need to put a lot of money into TIPS because they have the time to ride out market swings. But older investors should be more concerned with capital preservation, and that's where TIPS shine.

ALSO READ: 5 Unexpected Sources of Retirement Income

"The best way I know to get rich long-term is to invest prudently and conservatively and not try and get rich quick but try and get rich slowly, basically."

--Hedge fund manager Whitney Tilson

Investing prudently doesn't sound very exciting, but with respect to wealth-building, slow and steady wins the race. Most investors will do far better for themselves by building a portfolio of blue-chip stocks or broad-market index funds -- rather than following a neighbor's hot tip for a penny stock that's about to blow up. Choose high-quality assets and stick with them even when the market's going haywire. It's the simplest and lowest-risk way to grow your nest egg for retirement.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Years from now, when you are enjoying a comfortable, breezy retirement, someone might ask you what your secret was. You can say you followed the financial advice of an actor, musician, boxer, economist, venture capitalist, and a handful of investing experts -- spend less, save a bunch, invest in quality assets, and get rich slowly.

Catherine Brock owns shares of Coca-Cola, Johnson & Johnson, and McDonald's. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.