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Employee Education: 6 Frequently Asked Questions about Investing for Retirement

Saving for retirement is something we all know we should be doing. However, the energy barrier can be high when we aren’t clear on the best ways to save. We are passionate about helping employees maximize their retirement savings through education: sharing information in our financial wellness library, answering questions, and being available for one-on-one conversations about investment strategies. To help the employees out there who aren’t sure about the investment side of savings, here are six frequently asked questions that we hear often about investing for retirement.

Can ROTH contributions and pre-tax contributions be invested the same way?

Yes! The difference between ROTH and pre-tax contributions is the way they are taxed – not the way they are invested. You can hold the same investments for each contribution type. One difference to note is that the money will be held in separate buckets within your account because of the way they are taxed.

How does a target date fund work?

A target date fund is an investment option tailored for specific goals, such as retirement. It automatically adjusts its asset allocation, starting with a higher-risk profile and shifting to a more conservative approach as the target date approaches. This hands-off approach offers simplicity, diversification, and risk management for investors. Learn more about target date funds in this video!

Can I invest outside my retirement account?

Yes! For goals that are between one year in the future and the year you retire, you can open an investment account to potentially gain wealth to help you achieve those financial goals. This allows you to buy, sell, and hold a wide range of assets and investments, such as stocks, bonds, ETFs, mutual funds, cash, and money markets - to name a few. Though this does not provide the same tax benefits, it provides the freedom of access to the funds at any time.

Where can I find more information on the investments offered in my retirement plan?

By logging in to the website where your retirement account is held, you can view all the investment options in your plan. Here, you can also find the investment prospectus and quarterly fact sheet for each investment offered in your retirement account.

How do I lower my taxes as much as possible when investing?

The pre-tax option in your retirement plan is a great place to lower your taxable income. For non-retirement accounts, you can use an investment strategy called “tax-loss harvesting.” If you have a loss in an investment over a calendar year, you can sell the investment at a loss and then deduct those losses (up to a certain amount) from your taxes. It’s important to meet with a financial professional to discuss a “tax-loss harvesting” strategy that applies to your specific needs.

How do I manage against the risk of inflation?

There is not one simple answer for this question. However, there are a few different things you can do to manage against the risk of inflation. One of the best ways you can seek to protect your savings from inflation is to gain a return that is equal or above the inflation rate. With inflation currently running at 3.76% (as of September 2023), look for accounts with interest rates above that amount. This will help you stay ahead as much as possible.

Learn more about how CSi Advisory Services educates employees on retirement success.

To learn more, head to our Employer Services page, or contact us today to schedule a consultation!

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Contributions to a traditional 401(k) may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

A Roth 401(k) offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.

An investment in a target date fund is not guaranteed at any time, including on or after the target date, the approximate date when an investor in the fund would retire and leave the workforce. Target date funds gradually shift their emphasis from more aggressive investments to more conservative ones based on the target date.

Investing involves risk including loss of principal. No strategy assures success or protects against loss.

Securities are offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through CSi Advisory Services a registered investment advisor. Insurance services offered through HUB International. CSi Advisory Services and HUB International are separate entities from and not affiliated with LPL Financial.

CSi Advisory Services employs (or contracts with) individuals who may be (1) registered representatives of LPL Financial and investment adviser representatives of CSi Advisory Services; or (2) solely investment adviser representatives of CSi Advisory Services. Although all personnel operate their businesses under the name CSi Advisory Services, they are each possibly subject to differing obligations and limitations and may be able to provide differing products or services.

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