Do Not Be Misled About Retirement Planning
Whether you are just starting your first job or well into your career, retirement planning must have come up in conversations that you have had with family, friends or co-workers.
These conversations are all the same and money is always the issue.
…will you save enough money to afford retirement some day?
…with all your other expenses how will you find extra money to save?
…when you do eventually retire, will your money last as long as you do?
…how much money will you need to live on in retirement?
Of course everyone has their own opinion about these retirement issues, so asking your family, friends and co-workers for retirement advice can become overwhelming. Your best approach to retirement planning is to approach it from a basic perspective and take charge of your own financial future. If you need retirement advice, get it from a financial professional.
Retirement Planning|Know Your Basics
What To Do
You need to understand financial basics. You are at a disadvantage with retirement investing until you understand the basics about money management.
Spending money is easier than saving it – that is the first basic you need to get your mind around. The quicker you learn about money, the easier retirement planning will be for you. After you understand how to manage your money, you will be successful at retirement investing.
When To Start Investing For Retirement
After you have your credit card debt under control. If you are paying 19% or more in interest charges on your credit cards but only earning 4-5% on your retirement investments, the math does not add up.
- After you have an emergency fund set up. If you run into some unexpected emergency and have no source of funds to dip into what would you do? Withdrawing from your retirement plan is a poor financial option because you will get hit with fees and taxes. Taking a loan on your retirement plan assets would only be available if your retirement plan allows for loans.
If you have not opened a retirement account yet or have not made contributions to an existing account, do it as soon as you have your emergency fund set up and have your credit card debt paid down.
Where To Invest
Start at your work place. If your employer offers an employer sponsored retirement plan, great. If not, open an Individual Retirement Account at a bank or insurance company.
Choose investments that you are comfortable with based on the level of risk. Your risk level can be determined by retirement calculators, risk quizzes and money charts. If you are unsure about the investment choices offered, ask for the help of a financial professional.
Why You Should Invest In Your Retirement Plan
If your employer matches your contributions, and you are not contributing to your retirement plan, you are throwing away free money. An employer match is free money;do not leave that money on the table.
Money invested into a retirement plan is generally tax-deferred; which means your money is not taxed until you withdraw it at retirement. When you have money growing untaxed, the growth of your account will occur much quicker.
Planning your retirement is not supposed to be so hard. If you take the time to learn about financial basics, seek the help of a financial professional when necessary and choose investments that you understand you will be more successful at it.