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Retirement Savings

January 23rd, 2010

Getting a jump start on your retirement is always a good idea. Thinking about your retirement in your early 20’s isn’t normal, but it should be. Fewer than 30% of workers between the ages of 21 and 24 participate in a retirement plan that their employer offers. This is compared to over 60% of workers in their 40s that participate in similar retirement plans.

retirementIt isn’t surprising that the young are slow to get started on their retirement plans though. The younger you are, the further off in the distance retirement is. Most people concentrate more on the short term than the long term.

Half of workers between the ages of 22 to 33 that participate in a 401(k) consider everyday finances more important than their retirement plan.

If you just starting out on your plan for retirement regardless of age there’s 3 things you need to consider.

1.) Saving for retirement is not optional.
Unless you’re not planning on retiring at some point, you HAVE to save for retirement. If you just accept this fact early on then saving for retirement becomes easier. If you have a 401(k) through work than you should enroll in it so you automatically save with every paycheck. If you don’t have a 401(k) plan than you’re going to have to set something up on your own. You can setup either a traditional or roth IRA and have money transferred into it every month.

You don’t even need that much money to start a retirement fund, only a few hundred dollars, but the important part is starting one.

2. Don’t get caught up in the details.
There are a lot of options and things to consider and you can get in your own way if you analyze your retirement too much. Take some time to think about what you want and then just start a retirement fund. It’s better to start one quicker than to delay the process by a couple years. Even if you can’t contribute that much every month, you should do what you can.

If you’re investing your money try to keep it simple. Stock market index funds and a total bond market index funds are perfect investments. You don’t have to do anything fancy, an average plan will work just fine. A money market fund is even a good place to start or even IRA CD rates just to get the ball rolling. Starting is the key.

3. Keep up your savings.
As you start to earn more money you should similarly be adding more money into your savings accounts on a monthly basis. You can change your retirement plan as you go and as your presented with better options and as bank rates change. You can revise how much you save depending on your life situation.

The biggest step is just starting one. If you can do that you’re well on your way to retirement, the same holds true when you’re saving for college.

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