We know — you’ve heard it all before: The best time to start saving for retirement is now; the sooner you begin investing, the better. You hear this again and again because, over time, money that has been invested has the potential to grow exponentially. (This article offers an example of the dramatic impact time can have on retirement savings.)

What you may not have heard before is that your approach to investing — the strategies you use to try to maximize your savings — should change depending on your age. The amount you invest is likely to change over the years, since you may want to increase the amount you invest as your income grows; you should also reevaluate and adjust your asset allocation as time goes on.

“Asset allocation” refers to the mix of accounts or commodities you’re investing in. Primarily this includes stocks (equities), bonds (fixed-income securities), and cash or cash equivalents (savings accounts, money market accounts and certificates of deposit, or CDs). Other asset classes include real estate, commodities, and futures and other derivatives. Each asset carries a different level of risk (chance of losing money) and reward (chance of making money; also called returns). Investors strive to achieve just the right balance of asset types so that they make the most of their money without subjecting it to undue risk.

How Your Asset Allocation Should Evolve as You Get Older

If you’ve found an investment strategy that’s been working well for you, you might think that you’ve achieved that ideal balance of assets and that your investment portfolio is set for life. That’s simply not the case. As we age, our tolerance for risk decreases, because we don’t have decades to recover from losses we may incur. For example, if a stock you’ve invested heavily in suddenly loses value, you’re more likely to be able to bounce back from that loss at 20 than at 60. That’s because you still have decades to benefit from stock market activity and to invest in other, potentially high-performing assets.

While every investor’s strategy should be tailored to their unique goals and circumstances, the following examples illustrate how an asset allocation might look at various ages. Note that at least six to 12 months of living expenses should always be held in cash for emergencies or other circumstances in which you may need immediate access to your funds.

Investing in Your 20s

Asset Allocation Example:

Stocks – 80-90%

Bonds – 10-20%

While your top priorities in your 20s should be paying off any student loans or credit card debt you may have and building up your emergency fund, it’s also a fantastic time to begin investing for retirement. You can be more aggressive with your investments at this age, meaning you can lean more heavily on higher-risk assets, such as stocks, which may deliver a higher rate of return than bonds or cash.

One of the easiest ways to begin investing is to sign up for your employer’s 401(k) plan, if they offer one. This type of retirement account allows you to put money from your paycheck away toward your retirement before taxes are taken out. You choose how those funds are invested, and you can change that allocation as you go. One of the great features of a 401(k) plan is that some employers match their employees’ contributions to the plan up to a certain percentage, so you have even more money to invest. You don’t pay income tax on those funds until you withdraw them during retirement.

If your employer does not offer a 401(k) or if you are already contributing the maximum percentage your employer will match, check into opening a traditional or Roth individual retirement account (IRA). These accounts also enable you to choose how your funds are invested.

Investing in Your 30s

Asset Allocation Example:

Stocks – 70-80%

Bonds – 20-30%

Your priorities are likely to shift in your 30s. Instead of focusing on paying off student loans, you may be more concerned with mortgage payments or the costs of starting a family and saving for your kids’ college education. You’re also probably further ahead in your career and making more money than you were in your 20s, so this may be an excellent time to increase the amount you are investing. With years to go before retirement, your investments can still withstand a moderate amount of risk. However, you may want to consider allocating a bit more to more conservative assets, such as bonds, to give yourself a deeper cushion.

Investing in Your 40s

Asset Allocation Example:

Stocks – 60-70%

Bonds – 30-40%

At this age, retirement should be one of your top priorities. You’ve still got plenty of time before you’ll be withdrawing from your retirement account(s), but this is an ideal time to really build up your portfolio and ensure that you’re on track toward your goals.

Your risk tolerance begins to shift more noticeably in your 40s: While you can still place some of your funds into more aggressive investments, you should be diligent in doing your research first. Make sure that you’re putting your money into assets with solid track records of returns, and don’t take unnecessary chances. It will be much harder for you to recover from a loss now than it would have been in your 20s or 30s, and you may find it more difficult to bounce back.

Investing in Your 50s and 60s

Asset Allocation Example:

Stocks – 50-60%

Bonds – 40-50%

With retirement growing closer, you may want to consider a more conservative approach. A stock market loss could be catastrophic for your retirement savings now. It’s time to scale back on higher-risk assets and play it safe.

A top priority in your 50s should be drawing up a detailed retirement plan: At what age do you WANT to retire? Given your retirement savings, at what age will you be able to retire? Draft a budget to see how much money you will need in each month of retirement to live comfortably. If you find that you need to “catch up” on your savings at this time, revisit your 401(k) account. The IRS allows employees over age 50 to contribute additional funds to their 401(k) account in preparation for retirement.

Investing in Your 70s and 80s

Asset Allocation Example:

Stocks – 30-50%

Bonds – 50-70%

If you haven’t retired by this age, keep investing! Your investment strategy at this age should shift away from growth and instead move toward making your money last.

Keep in mind that the percentages noted above are simply examples and not advice as to how you should invest. As you create your own plan for investing and saving for retirement, you may want to consider consulting a financial advisor. A good advisor can help you evaluate your financial situation and build an investment plan to help you achieve your goals.