Retirement can sometimes be like that one cousin at family gatherings. The one that nobody likes to talk about. I think that, like that cousin, it’s easier to put our retirements out of our minds simply because, for many of us, it’s still so far away. We’ve still got 10, 20, 30, or even 40+ years before we hit that golden age of 65.5 and start living the good life of retirement. Naturally, our nearer goals are at the front of our minds and take up most of our thoughts. After all, which are you more likely to worry about? Your upcoming performance evaluation next week, or your retirement in 35 years? Retirement never stood a chance. But, like that cousin, you’ve got to think about your retirement sooner or later. And, the sooner you start thinking about it, and preparing for it, the better off you’ll be when it comes time to face it.
In fact, the sooner you start saving for retirement, the better off you’ll be. Not only will you have to save less because of the wonders of compounding returns, but you’ll have more to show for it when it comes time to retire. At an average of 7% return, any money that you save for retirement will double every 10 years. What does that mean? If you wait an extra 10 years to start saving for retirement, you’ll have effectively cut your retirement fund in half, and will need to either drastically increase the amount you’re saving each month, or learn to live on less in retirement.
Saving for your retirement doesn’t have to be complicated either. Sometimes, it’s downright easy! How do you make the most of your early retirement saving? Stop leaving it on the table. Get active with your savings. Go beyond being active, and be pro-active. Start with your employer. If you’ve got a 401(k) through your employer, take advantage of it. Contribute up to the full amount that your employer will match. Your HR department will help you get it set up, and give you the information on the match so that you can do that. Most 401(k) programs will have a set of target date funds that can be used to effectively set your 401(k) on autopilot. If you don’t want to be involved in the choosing of funds for the money to go into, the target date funds can be a great choice.
Once you’ve gotten the full match from your employer in your 401(k), you might want to look into a private pension plan or an IRA as well. For most, the Roth IRA, with it’s tax free growth and withdrawals is probably the right choice. If you’re under 50, you can contribute up to $5,000 every year into an IRA. Use your tax refund, if you get one, to give yourself a boost each year on meeting that $5,000 limit. If you’ve still got more retirement saving to do after you’ve met the contribution limit, you can up your deduction into your 401(k).
If you need more help with your retirement, or help figuring out what, how much, and when to save, find yourself a retirement expert. Your CPA or a certified financial planner should be able to give you a detailed plan for your retirement savings. The most important thing you have to remember with all this retirement talk is that if you don’t save, you won’t have any retirement funds to worry about. Unless you want to count on Social Security to fund your retirement. I’ve seen people who have done that. You don’t want to be in their shoes. Get your retirement saving started today. It really is important. Even more than that performance evaluation.
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I started saving for retirement at 21 and then at about 27 stopped for too many years. I just started doing it again 2 years ago. It’s sad I stopped for so long but the past is the past. Actually it’s all a learning process and I hope that my lack of contributing doesn’t bite me in the you know what later.
I am on track to max out my Roth for the first time ever this year and keep putting a lot into my 401(k), more than my company match, and invest and save elsewhere as well.
One thing I have started to think about for retirement is income from other sources. A real estate portfolio can generate income both before and during retirement.
Two wishes for retirement: I wish that I had put more aside earlier. I put aside 10% but I should have put aside more when my salary was lower. I probably could have afforded to. Second, is that I looked at retirement perks as part of my compensation package when looking at job offers. I never did and while I’ve never had many complaints about my salary, the fact is that I’ve only had one job where I’ve gotten any type of 401(k) match. This has definitely had an impact now that I’ve got 15 years of career experience (and retirement savings).
I like using Roth IRAs and my work has a Roth401k and I prefer them over traditional. The Roth 401k actually allows you to save more if you Max it out. At least get any match available.
I wish we wouldn’t have waited so long to start saving for retirement. 🙁 Better late than never though. Unfortunately, my husband’s 401k doesn’t offer any match, so that sucks.
Retirement planning is one of the hardest planning that a person goes through in his/her entire financial life. I had seen my dad went through a financial crisis for not planning it at an early age. Since then he has been my sole inspiration to get started with the planning since I was 25. He took full initiative so that I consult adviser and do it systematically so that not even for a month my determination gets derailed. Nice content to look forward.
The pro and con of growing up in Generation Y is not knowing if social security will be around when I retire. It’s inspired me to keep saving and max out my Roth accounts, because I may be on my own!
I think one investment opportunity many families forget to consider is life insurance and annuities. Recently, I read an article at Gajizmo.com about how millionaires invest 9% of their portfolios in insurance and annuities, and whole life insurance is a great way to get life coverage with a cash value. I think families should have the discussion of comparing different types of life insurance, such as term vs. whole life insurance.