Your Retirement Planning Is Urgent
If you want to retire some day you will need to do some retirement planning. It usually takes until your 50’s to realize the mistakes you made in your 20’s. Do yourself a favor, don’t wait that long to make the mistake of not planning for retirement when you are young. The younger you are when you start saving for retirement the greater dent you will make in your financial future.
#1 – It Takes A Life Time
Is your goal to skip retirement and work forever? If not you need to start saving for retirement the minute you receive your first pay check and W2 form. Unless you win the lottery the reality is, it will take most of your career to save enough money to retire someday. You will spend the same amount of time in your retirement years as your working years therefore, your monetary needs will not change much. Your cash flow will change though because your pay checks stop at retirement.
#2 – Who Wants Free Money?
The smartest financial move you can make is to include tax-deferral in your retirement planning. How, by investing in a 401k retirement plan or a traditional IRA. If you invest in a 401k plan that offers an employer match you get free money thereby increasing the growth of your retirement account with little effort on your part. You reap different tax benefits with IRA’s.
#3 – Before Tax Money
The tax-deferred benefit of money invested in a 401k retirement plan or an IRA is one of the best benefits around. In effect, the IRS treats money in these retirement accounts as if you never earned it so you get a free ride on this money. Since you do not pay taxes on this money until you withdraw it at retirement your money will grow faster.
#4 – Retirement Will Be Expensive
Make no mistake about it you will still have expenses when you retire. You will eliminate some and add others.
Expenses Eliminated Or Reduced At Retirement
- No paycheck, no income taxes
- Work clothes, lunches out, commuting costs
- Drop a car and reduce your insurance and maintenance costs
- Hopefully your mortgage and car payments
Non-Inflation Proof Expenses That Continue At Retirement
- Health care costs
- Taxes on investment returns
- Pension income taxes
- Real estate taxes
- The basics: housing, food, clothing
- Home repairs
- Hobbies, personal entertainment and traveling costs
If you think retirement is a long time from now, you may be right. But that’s a good situation to be in because you have that much longer to save and have your investments grow. Be a financial friend to yourself, start retirement planning today.