It's Never Too Late To Start Saving For Retirement
In your 20s and 30s, retirement can seem too far off to worry about. As you get older, college tuition for your kids, home repairs, and various unexpected expenses can become your top financial concern. Whether retirement is years away or just around the corner for you, having a well thought out plan can make the difference between a comfortable financial situation and a tough one. The key is setting your goals and sticking to them.
Make Saving For Retirement a Priority
The earlier you start saving for retirement, the longer your money has to grow. You're also better able to weather ups and downs in the financial markets because you have time to rebuild your assets if needed.
Put away whatever you can afford by having money automatically deducted from each paycheck and deposited in your retirement account. Starting early makes a significant difference because interest is compounded. When you earn interest on your money, that interest is added to your base amount. The next year, you're earning interest on that larger sum.
For example, if you save $3,000 a year in a tax-deferred (you don't pay taxes until you withdrawal the money) account with an 8 percent annual rate of return for 10 years starting at age 25, your $30,000 investment would grow to $472,000 by age 65 even though you made no contributions after age 35. If you start when you're 35 and save $3,000 a year for 30 years at the same return rate, your $90,000 would only grow to about $367,000.
Build Your Plan
There are several steps to build a plan for retirement.
What To Do if You Get a Late Start
It's never too late to start saving for retirement. Find money to put away by raising your insurance deductibles, lowering expenses and cutting high interest debt. If your employer matches 401(k) contributions, contribute enough to get the maximum match. Consider a more aggressive investment strategy, which could potentially help you build your balance faster. You can also work longer to delay tapping retirement funds and give them more time to grow.
Build a Foundation for Your Future
Start your retirement savings plan today and be proactive about providing for your future.
This article is for informational purposes only. For personalized financial advice, you should contact a qualified financial advisor.