Someday you will reach retirement age…guess what, we all do. The question you need to ask yourself is whether or not you will be ready to stop working when you do reach retirement age. Will your investments be enough to support you in retirement?
The only way to stop working is to have enough money saved up to live on…very basic. In fact it’s so basic that it’s ignored by lots and lots of people until retirement age gets close and they realize they have to keep working due to lack of funds…their investments will not support them in retirement.
With some planning you can avoid the trap many people find themselves in at retirement age…not have enough money invested to support themselves in retirement.
Planning your investment strategy is not that difficult if you break it down into steps. Let’s review some retirement saving tips to get you started on the right road to you retirement.
Tips On Investing For Your Retirement
Your Investment Strategy:
#1 – When To Start Investing:
- The absolute best time to start investing for your retirement is when you get your first job…even if you are only 16.
- The logic behind starting at such a young age is that your money will have more time to work for you.
- The longer your money is invested, the longer time it has to grow plus rebound from any market corrections that occur over the years.
- If you are well beyond your first job and well into your career, don’t be discouraged if you have not started your retirement accounts yet, it’s never too late to start.
- If you are starting to invest for retirement at a later age, you may have to just save a larger percentage of your income to catch up…and that’s okay.
#2 – How Much To Invest:
- Most financial advisors will tell you to invest as much as possible, but you really want to be more accurate than that.
- You should set up an investment target for yourself.
- The general rule is to invest between 10 to 15% of your income.
- This percentage could change due to your age.
- If you are closer to retirement you will have to increase your investment percentage.
- If you are in your teens and you have a part-time job, 10 to 15% may be unreasonable. The purpose of a teenager investing for retirement is to develop the habit of saving. So the actual amount of savings a teenager should invest is a personal decision.
- Work with an online retirement calculator to narrow down some retirement figures for yourself based on your personal financial goals.
#3 – Where To Invest:
- The best retirement investments are tax-deferred investments.
- Tax-deferred retirement investments include 401k plans, Individual Retirement Plans and 403b plans.
- Tax-deferred investments are the best for investments for retirement because they allow you to defer paying taxes on your investment amounts and the investment earnings.
- If your employer’s 401k plan matches your 401k contributions, you are getting free money…can’t beat that.
- An individual retirement account can be a Traditional IRA or Roth IRA. A Roth IRA is not set up on a tax-deferral basis, but a Traditional IRA is.
Today is the perfect day to start investing for your retirement. The longer you delay planning and developing your investment strategy, the harder it will be. Don’t delay, start today.