With Retirement There Are No Do-Overs

Learn As Much As You Can About Retirement, Quickly!!

Good planning usually produces good results.   When you decide to go on vacation, you take a lot of time planning for it.   You plan when to go, where to go, who to go with.

You need to put just as much attention into planning for your retirement as you do your vacations.  Make no mistake about it, you will be spending 20 to 30 years of your life in retirement.

What Age Should You Start Retirement Planning?

Financial planners will tell you that it’s never too early to start investing for your retirement; in fact, your first job is the best time to start.   The problem when you start your first job is that you are very young and not thinking about 40 or so years ahead when you will reach retirement age.

Why Should You Start Retirement Planning Early?

Compounding interest is your best friend when you are saving for retirement.  The magic of compounding interest works best when you start investing at an early age because your money has a longer time to work for you.   Compounding interest means that you earn interest on interest on interest on interest; your money is growing without much effort on your part.

When you are young you also have fewer expenses to deal with, so you have more money to invest.   You will not miss the money as much as you will when you get older and start a family, buy a home and accumulate other debts.

Do The Math|Compounding, Your Silver Bullet

  • If you start investing at age 21, invest $15,000, at age 65, earning an average of 4%, that $15,000 investment will be worth approximately $87,000.
  • If you wait until you are 31 and invest that same $15,0o0 it will grow to only $58,000.
  • At age 41, that same $15,000 will grow to only $39,000.
That should show you how magical compounding interest can be.
Start investing for your retirement on your first job

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Which Retirement Investment Option To Pick

You have a few investment vehicles to choose from.   You have employer sponsored retirement plans such as 401k’s or 403b’s.  You have Individual Retirement Accounts, Traditional and Roth.

Retirement Plans At Work

If your employer offers a 401k retirement plan, and includes matching, that match is free money.   Start out maxing out that 401k retirement plan.   You cannot get matching from an Individual Retirement Account.   Sometimes your employer will have vesting schedules, which means that you will have to work for that employer for a certain period of time before having access to the free match money, but that’s okay, it’s still free money.

Personal Retirement Plans

Individual Retirement Plans are opened outside of the work place.   You can buy an IRA, Traditional or Roth at a bank, insurance company or brokerage house.

The way both Traditional and Roth IRA’s work is that as long as you have earned income which you receive a W2 for, you can open an IRA.  So you  earnings received in cash cannot be contributed to an IRA, it has to be W2 earnings.

Pay Now Or Pay Later|Squirrel It Away

You can spend all of your time and money planning for vacations and fun during your working years and avoid planning for your retirement.   Or you can find a balance, spend some money on vacations and fun during your working years but also squirrel away some money for your retirement years.   It’s your money, your choice…make the right financial decisions, there are no do-overs with retirement.