|
Investing For Retirement At All Ages
Whether youre twenty or fifty-five, investing for retirement is a good idea.
Many people believe they can depend on social security to take care of them after they retire, which is a mistake two reasons. First, social security pays only a portion of your current income, People trying to live on their social security checks alone often find themselves living an austere lifestyle indeedno vacations, fancy restaurants, or expensive presents for grandchildren.
Second, as the Baby Boomers age, social security is facing a crisis of epic proportions. By the time you are of an age to retire, benefits will probably be reduced even more than they already are. Some cynics believe that the system may be eliminated entirely, which makes investing for retirement even more important.
Investing for retirement requires some strategic planning based on your current age.
Twenty-Something
If you are in your twenties, retirement is probably the furthest thing from your mind. You are probably just entering the work force and learning to enjoy having disposable income. But those forty or fifty years between now and retirement will pass faster than you think, and you certainly dont want to be unprepared when the time comes. There are a few investing for retirement strategies you should start to follow now.
Opt into your companys retirement plan, especially if your company offers benefits like matching or partially matching your contributions. Dont worry if you can only afford to place a small amount into your retirement plan right nowit will have time to grow. Companies generally allow you to choose among several funds. Many advisors suggest that you put part of your money in a low-interest-rate-low-risk fund and part in a potentially higher-interest-rate-high-risk fund.
Thirty-Something
During this time, your money is probably wrapped up in raising a family, planning for college funds and worrying about what would happen to your kids if something happened to you. You are also probably making more money in your career than you did when you were in your twenties.
If you havent started planning for retirement yet, theres still time. The most important thing you can do is pay yourself first. You cant miss what youve never had, so have the company deduct the maximum allowable amount from your paycheck to put in your retirement fund.
Forty Or Fifty Something
If you are in your forties or fifties before you start thinking about investing for retirement, you have some catching up to do. First and foremost, immediately began contributing to your companys retirement fund. The law will allow you to contribute up to 35% of your salary, if you can afford to do so. Its best not to seek out aggressive/risky funds now, because you wont have time to recoup your losses if their value takes a dip.
While you are working on investing for retirement, you might want to consider putting off retirement for a few years. This will help for two reasons. First, it will allow your retirement fund time to grow. Second, the longer you put off retiring, the greater the percentage of income you can collect from social security (assuming the current system doesnt change).
Finally, you may want to consider taking a second job or doing some work from home to earn a little extra income, all of which should go into your retirement fund.
It doesnt matter whether youre twenty, thirty, or fifty. Investing for retirement should be an important part of your financial planning.
|