Many workers, both young and old, spend plenty of time dreaming about retirement. Those hoping to spend these years playing golf, traveling, or doing anything else their hearts desire should start planning now. Here’s a look at the five top investment tips for planning a happy retirement.

Set Goals and Objectives

Investors should calculate their current net worth and estimate their future retirement expenses. Some experts estimate that the average standard of living for retirees is anywhere from 70-90% of the investor’s working salary. However, it’s important to also factor in an increase in the cost of living and any special activities, such as traveling, one wants to do in retirement.

Start Planning Early

Retirement planning is not an overnight process. Instead, it takes years of planning, preparation, and investing. The earlier an investor starts preparing for retirement the easier the planning process is. After all, it’s a lot easier to build a high-value retirement fund over the course of 30 or 40 years than it is to build in just 10 or 15 years. However, it’s never too late to start. It just might take a stronger financial commitment.

Build a Diversified Investment Portfolio

The phrase, ‘Don’t put your eggs in one basket,’ couldn’t ring truer than when it comes to investing for retirement. Building a diverse portfolio, such as stocks, mutual funds, pensions, and 401(k)s, protects investors in the long run. For example, a portfolio built solely on stocks could prove dangerous if there was a sudden drop in the market. Additionally, diverse investments can provide multiple streams of income during retirement.

Develop a Debt Reduction Plan

Building a nice retirement investment portfolio is just one step of the retirement planning process. It’s equally important for investors to try to decrease their expenses for their retirement years. Developing a debt reduction plan 5 to 10 years prior to retirement can help. Investors nearing retirement should take steps to pay down, or pay off, their mortgage, car loans, credit card balances, and any other types of debt.

Consider Tax Effects

Several retirement planning tools, such as 401(k)s, allow people to invest pre-taxed dollars. This is referred to as a tax deferral plan. This doesn’t mean that investors won’t ever pay taxes on this money. It means they defer paying taxes until the money is withdrawn. It’s crucial for investors to understand the full tax effects of their investments and how they will impact their retirement.