Retirement can be some of the best years of your life, but you’ll need to have the money to support yourself. Though you may think it’s too early to start worrying about saving for retirement, the sooner you get going, the better. There are a few good ways to get started without the stress of trying to figure it all out now.
Save, Save, Save
You probably already have some savings now, so keep at it! The earlier you build up your savings, the more it earns you over time. Even if you can’t save much, every penny counts. As your budget stabilizes or you earn more money, put more away each month. Make it a habit in whatever way works best for you. Many banks set up automatic transfers that take money from checking and into savings without you having to lift a finger. This way, you don’t even have to think about it and you may even be rewarded for having such a set up.
Just the number sounds confusing and governmental, but really, you should be putting money into your employer’s 401(k) plan. Talk to your employer if this isn’t already set up. If it is, make sure you’re putting in as much as the company will match. For example, if your company matches up to 4 percent, have them take 4 percent out of your paycheck each month to go into your 401(k). It ends up being 8 percent total with the match. How great is that?
If you can afford to put away more than your company’s match, go for it. That money just won’t be doubled. Think of it as giving your future self a little something something.
Here’s another bit of jargon for you: A pension plan is another arrangement your company will set up that puts money away for retirement. The amount of time you work at a certain place and the size of your salary determine how much you earn from your pension upon retirement.
Check out the stock market and invest. Stocks can increase in value over time. You can choose which stocks to invest in based on risk. If this is all too complicated, talk to an accountant or financial advisor, and he or she can come up with some plans from which to choose.
Leave it Alone
Now you have money all over the place for retiring. Let that money grow by leaving it alone. Taking money out of certain retirement funds could incur penalties or cause you to lose out on tax benefits (oh no!). If you change jobs, find out if you can move your plan over to the new company or just leave the money as it is now.
Since you’ve done all this work building up savings for retiring, don’t ruin it with debt. Pay off your credit card bills, then your student loans. This frees up money to go to–you guessed it–savings!
The moral of the story when it comes to saving for retirement: Start now. Put away as much as you can in the proper places–work programs, savings accounts and stocks–and over time, that money will compound into a nice little nest egg.