Posted on: 19th Nov, 2009 03:44 am
When it comes to retirement savings, it's the early bird that catches the worm. To all those who thought retirement saving is an old man's business, the recent financial crisis must have sent a strong message: Start saving for your retirement as early as possible. Be an early bird to catch the benefits of retirement savings before it's too late.
It's never too early to start saving:
It is a wise decision to start saving for retirement right from your early 20's. This is a period of time in life which is not just about fun and frolic, but also about some serious planning. After all, the later you are in start saving for your retirement, the more money you need to invest in future. In fact, one should start saving as soon as one starts earning money. Financial experts say, one should save at least 10% of one's income for retirement savings.
Plans that help you save for retirement:
If your employer is offering you a 401(k), this is the time to grab the opportunity and enjoy the benefits of the retirement plan. The more you contribute towards your 401k plan funds, the better, because your employer will also contribute a similar amount to your retirement fund. Does your employer not offer a 401(k) plan? No worries, you can always open an Individual Retirement Account, better known as IRA and take advantage of the available tax benefits.
Thanks,
Jerry
It's never too early to start saving:
It is a wise decision to start saving for retirement right from your early 20's. This is a period of time in life which is not just about fun and frolic, but also about some serious planning. After all, the later you are in start saving for your retirement, the more money you need to invest in future. In fact, one should start saving as soon as one starts earning money. Financial experts say, one should save at least 10% of one's income for retirement savings.
Plans that help you save for retirement:
If your employer is offering you a 401(k), this is the time to grab the opportunity and enjoy the benefits of the retirement plan. The more you contribute towards your 401k plan funds, the better, because your employer will also contribute a similar amount to your retirement fund. Does your employer not offer a 401(k) plan? No worries, you can always open an Individual Retirement Account, better known as IRA and take advantage of the available tax benefits.
Thanks,
Jerry
Hi,
I have to agree with you, Jerry. Saving money for retirement should start right from the 20's and should continue through the 30's and 40's. It is understandable that during this time you'll have to save for your child's education, down payment for a larger home, etc. Nevertheless, you should be able to save at least 10% of your income because by that time you're expected to earn more. Start paying off the debts carrying high rate of interest, like credit cards, etc. Keep contributing towards your 401(k) or IRA as much as you can. You should also start investing in stocks and mutual funds, especially those offering plenty of growth.
In your 50's and 60's, it's time to protect your hard-earned savings. one of your primary concerns would be to pay off your existing debts to become debt-free by the time you retire. This is a time when you should look to protect what you've saved through your 20's and 30's. You should consult with your advisor and concentrate more on low risk investments, rather than high risk ones. Once you are 60+ years old, paid of all your debts and saved enough for your retirement, get ready to live a new life with no worries, no concerns, just countless leisure to sit back and enjoy a comfortable retirement.
I have to agree with you, Jerry. Saving money for retirement should start right from the 20's and should continue through the 30's and 40's. It is understandable that during this time you'll have to save for your child's education, down payment for a larger home, etc. Nevertheless, you should be able to save at least 10% of your income because by that time you're expected to earn more. Start paying off the debts carrying high rate of interest, like credit cards, etc. Keep contributing towards your 401(k) or IRA as much as you can. You should also start investing in stocks and mutual funds, especially those offering plenty of growth.
In your 50's and 60's, it's time to protect your hard-earned savings. one of your primary concerns would be to pay off your existing debts to become debt-free by the time you retire. This is a time when you should look to protect what you've saved through your 20's and 30's. You should consult with your advisor and concentrate more on low risk investments, rather than high risk ones. Once you are 60+ years old, paid of all your debts and saved enough for your retirement, get ready to live a new life with no worries, no concerns, just countless leisure to sit back and enjoy a comfortable retirement.
The joy of compounding interest. Great to have it work for you for once!
small consistent savings now will undoubtedly lead to high returns later, but some research has to be done into the right investment vehicle for you.
Bank interest is taxable just like income, so the interest rate you see advertised is not what you will actually get. In many cases savings in the bank only really keep pace with inflation in real terms.
Mutual funds and stocks are another option for those with a tolerance for higher risk profiles - make sure you do your research on your provider though. Mutual funds are by no means infalliable but have given pretty good results over time compared with fixed interest.
As a bottom line - the eralier you start the easier it is, and the more mistakes you can afford to make. as a side benefit you'll also learn a lot about financial markets, investments and a bunch of other stuff you never understood before so you get an education thrown in for free.
The sooner you start thinking about money (in ways other than how much is my credit limit!) the better.
small consistent savings now will undoubtedly lead to high returns later, but some research has to be done into the right investment vehicle for you.
Bank interest is taxable just like income, so the interest rate you see advertised is not what you will actually get. In many cases savings in the bank only really keep pace with inflation in real terms.
Mutual funds and stocks are another option for those with a tolerance for higher risk profiles - make sure you do your research on your provider though. Mutual funds are by no means infalliable but have given pretty good results over time compared with fixed interest.
As a bottom line - the eralier you start the easier it is, and the more mistakes you can afford to make. as a side benefit you'll also learn a lot about financial markets, investments and a bunch of other stuff you never understood before so you get an education thrown in for free.
The sooner you start thinking about money (in ways other than how much is my credit limit!) the better.
Here are some tips from my end which may help you plan and save for your retirement in a better way:
- Planning: It is important when you want to start off with your retirement savings. If you're retiring within the next 10 years, your plan will be different from someone who will retire after 30 years.
- Savings plan: All savings plan do not offer the similar choices. Check out what your savings plan is offering you and save accordingly. As Jerry has suggested, check out the retirement savings or pension plan that your employer is offering you at work. Saving in these plans will be your first step towards a better life after retirement.
- Financial goals: Calculate to find out how much money you would require when you retire. Thus, you can make a target and will be able to save accordingly for your retirement.
Contributing to a 401k Plan is a good move towards early retirement savings. While you contribute your funds into a 401k Plan account, you may also go for a Roth IRA. There's a deadline for Roth IRA contribution. You can contribute till the tax filing deadline in the following year.
For 2009, the maximum contribution limit is $5000. You do not have to pay taxes and penalty upon withdrawal at the age of 59 and 1/2 years provided the contributions have been held in your account for minimum 5 years. The contributions are not tax deductible because they have been deposited into the Roth IRA account after you've paid the taxes.
However, not everyone can have a Roth IRA account. Given below are the income limits (modified adjusted gross income, that is, income after all deductions) of taxpayers who can deposit funds into the account.
May god bless you. :)
Samantha
For 2009, the maximum contribution limit is $5000. You do not have to pay taxes and penalty upon withdrawal at the age of 59 and 1/2 years provided the contributions have been held in your account for minimum 5 years. The contributions are not tax deductible because they have been deposited into the Roth IRA account after you've paid the taxes.
However, not everyone can have a Roth IRA account. Given below are the income limits (modified adjusted gross income, that is, income after all deductions) of taxpayers who can deposit funds into the account.
- Single filers: Those who're earning up to $101,000 can qualify for full contribution whereas individuals earning more than $101,000 but less than $116,000 are eligible for a partial contribution only. Single filers earning more than $116, 000 are not allowed to contribute.
- Joint filers: If you're a joint filer, you can qualify for full contribution provided you earn up to $159,000 or partial contribution in case your income ranges between $159,000 and $169,000. Those who're earning higher than $169,000 are not allowed to open a Roth IRA account.
May god bless you. :)
Samantha
with employers having done away with pension plans almost altogether, there's no time like the present to begin putting money away for oneself in a retirement account. i wish i'd known all those years ago what i know now. oh well..spilt milk and all...
I agree. here is no need to wait. As soon as a person starts working, he should start saving for retirement. The amount saved at first may be small but it will add up in the long run. Once the savings are large enough, a person should start investing the money in a mixture of assets to guarantee returns.