You have heard it time and time again and today will be no different. We wanted this to be a bit more targeted to those in their 20's and 30's but it can apply to anyone regardless of your age. Start saving for retirement now!!!
The fact is that most 20 or 30 year old's think that they can wait to save for retirement when it becomes easier to actually save. The truth is though that it typically never gets easier. There are so many things that typically creep in that take away your attention, time and money. For instance, getting married and having children easily becomes one of the biggest distractions to retirement saving for those in their 20's and 30's. Not to mention a new house, car and traveling are a few others just to name a few.
Why Should You Save Now?
It isn't going to get any easier. We are seeing the demise of pensions and retirement account offerings. We are having to be responsible for our own nest eggs. The good news is that many in their 20 and 30's realize this. The thing you need to do today is change your mindset. The longer you wait to save for retirement the more money you will have to save save. I think we would all agree that having to save more than if you would have started earlier doesn't sound fun. To explain it simply, a $1 invested at 25 is just about five times more valuable than a $1 invested at 45.
Set Up A Plan To Save
Commit to saving now! It is important to start saving something no matter what it is. A great goal would be to start saving roughly 10% of your income. If you don't think you can handle that then maybe you need to look at what you are spending your money on and cut out the unnecessary purchases because your retirement is more important. If you think anything less than 10% will do it, you are more than likely wrong. In a way it is like betting you will kick the can within 10 years of retirement.
Again if you absolutely can't save 10% of your income then start somewhere but push yourself to eventually get to that 10% as soon as possible.
If you happen to be one of the lucky ones that sill has a 401k offered to them and a match from your employer make sure you maximize your contribution to get the full match. It is free money. Find out how much you need to contribute to get the full match and do it! There is no way you can help your retirement out more than by adding free additional funds to your accounts.
Step Outside The Box
If you have a 401k and still have other means to save or if you don't have the option of a 401k then fund an IRA. You'll need to decide between a roth or traditional IRA as the one you choose can play a big roll in taxes and the total nest egg you will actually get to take home at the end of the day. I would first decide if you are going to use a roth and then I would talk to a retirement specialist as to if a traditional or roth works better for your situation. Typically for those in their 20's and 30's a roth will be the way to go.
Invest How You Want
When investing with an IRA one thing you can do or push off to an investment professional is to choose your investments. When going with investment professionals you'll typically only be able to invest in stocks, bonds and the like. If you want to invest in actual real estate, gold, private placements or just about anything then you need to make sure you choose a firm that allows for self directed IRAs. A self directed IRA is the same thing as a regular IRA the only difference is that the custodian (firm) allows you to invest in non-traditional investments.
A self directed IRA is a great option that allows you to truly diversify your retirement accounts. For more information on investing how you want into things other than the stock market contact us today.
While I mentioned before that you'll want to shoot for saving 10% one other thing to try and do is to maximize out what you can contribute to your retirement accounts. Again, this can be hard to do and you should be shooting for saving at least 10% of your income but don't ever stop there because the best case scenario is maximizing your retirement accounts out each year.
Hopefully those of you who are just getting into the workforce can really start saving for retirement because time is one of your biggest assets and the earlier you start the bigger impact it will have on your retirement. Start today and make the best of your retirement by saving to your retirement accounts today.
Author: Nick Barker