How Do Young People Benefit From An Early Retirement Plan?
How Do Young People Benefit From An Early Retirement Plan?
At a young age, it may seem to you that retirement is so far away, but it’s never too early to start saving for your retirement when it comes to money matter.
As you’re young, time is on your side. Don’t wait until you’re 30, 35, 40, 45, 50 to start saving.
You may still not get my point about starting early to save for retirement.
Here, let’s look at one example.
Say, you put $1,000 into savings every year from age 20 to age 30, contributing a total of $11,000. You stop, but you don’t spend it; you leave the money there.
Your friend starts to save $1,000 at age 30 until she’s 64, contributing a total of $35,000.
Guess what? Your money will be more than your friend’s at age 65, even though you put in a lot less.
Why? Beause you started earlier and compound interest has longer time to make your money grow.
So now you see why it’s important for you to start saving from day one (after clinching a full-time job) as your money will have many, many years to grow into an handsome pile.
By starting early, you also get to save a lot less later on.
How do you go about saving for your retirement then?
Here are 2 ways you can start off:
1. Take advantage of your employer’s retirement savings plan
Your workplace savings plan is the easiest way to start your savings wheel rolling.
If your employer offers a 401k or similar retirement savings plan, grab it; take the initiative to sign up for it.
Decide how much you want to contribute from your monthly paycheck and where you want to invest the money.
There’s the so-called “free money” involved in a 401k. This is due to your employer’s matching with your contributions.
Your employer may contribute to your 401k account once you begin to put money in it.
If say, your employer matches 50 cents for each dollar you contribute, this is an immediate 50% return. Grab it! There’s literally no other investment that’ll yield you that kind of guaranteed return.
Find out how much your employer match is and how much you need to contribute to get all of it.
Or it could be that your employer offer you a traditional, old-fashioned defined benefit pension plan.
In this type of plan, your employer contributes the money, invests it and pays a benefit to you upon your retirement, based on your pay and the number of years you worked in the company.
2. Open an Individual Retirement Account (IRA)
Whether or not your employer has a retirement savings plan, you can start saving in an IRA.
An IRA is a personal account that you set up with a bank or a mutual fund company.
You can direct your savings to the account by either sending a check to the bank or have a constant amount deducted regularly from your checking or savings account, or from your paycheck.
Start to save now. As your pile of money grows, strategize the best way to invest it, to max out the returns……
It’s never too early to plan for your retirement. By the way, do you know that 38% of people retire earlier than planned and lead fruitful, meaningful retirement.
Find out how you can too here: http://retire.sitesell.com/8258171.html