Many financial experts correctly point to the time value of compound growth as one of the key factors in building wealth, which, unfortunately, means that someone who begins saving in his or her mid-thirties or later may wind up with only about half the wealth achieved by someone who began putting aside the same amount in their mid-twenties. If you've waited until your forties, fifties, or even sixties to become serious about saving for retirement, you'll need to take some different tactics with your saved and invested funds than those in the younger age brackets to avoid being left behind. Read on to learn more about wise investing for those who have begun ramping up their retirement savings later in life. 

What should you consider when deciding where to invest your funds?

Because of the volatility of individual stocks and index funds, many investment professionals recommend not keeping "short term" money in the market -- that is, funds you're planning to spend within the next year or two. Keeping short term money liquid will help you avoid having to make a withdrawal during a market slump or recession.

On the other hand, investing too conservatively or remaining in cash for safety reasons can hamper your potential for growth, and getting started later means you'll need even more growth to catch up to those who began saving earlier in life.

As a result, wise investing for retirement on a shorter horizon can be a balancing act that's tough to perfect. You'll probably want to seek the services of a certified financial planner (CFP) or fee-only planner who can help you review your income, budget, projected retirement expenses, and other factors to be taken into account when charting your course.

How can you achieve growth quickly without sacrificing stability?

One of the best ways to balance your desire for growth with your need for stability is to separate your funds into short-term, mid-term, and long-term categories. Upon retirement, you'll want at least a few years of living expenses in one of your more conservative short-term or mid-term investments, ensuring that these funds won't be eroded by market fluctuations when you need them the most. You'll then be able to invest your long-term funds more aggressively for growth, as it's unlikely you'll need to tap into them until later in your retirement years. 

You'll also want to consider the tax treatment of your various investments. For example, if you're contributing to retirement with funds that have already been taxed (like a Roth IRA), you'll need less growth to achieve the same goals (as you won't need to deduct taxes from the amount withdrawn). A CFP can help you work through the tax treatment of your various retirement dollars to determine whether your pre-tax or post-tax investments should go into the "short term" or "long term" buckets. 

For more information about saving for retirement later in life, talk to a financial service like Weyco Community Credit Union.