Author: MJT
Are You Too Young for a Retirement Plan?
When thinking of ones retirement plan, most people only
think of how old they will be when they retire, there are other factors to
consider; how old a person is now, how old they may live to be, the type of
investments they have already made, the type of return those investments are
thought to bring, and how much money a person will need to live well during
retirement are all important things to consider. Age as a factor is important
because many people don’t think they need to save for retirement until they are
between 40 and 50 years old, this is not going to secure a quality retirement;
in ones retirement plan they should count on saving money and investing by the
age of thirty, and should count on saving a bit of money in their weekly
budget.
Investments
Wise investments for retirement planning include: bonds,
IRAs, 401K, and a company matched pension plan.
Bonds are loans the purchaser gives to the company the bond is purchased
from which earns a set amount of interest over a set amount of years, these are
low risk and predictable. 401K plans are tax sheltered retirement saving plans
which many companies will match a percentage of the employee’s investment
sometimes up to 100% matching; this type of saving is tax sheltered or not
subject to annual taxes, and is an essential part of any persons retirement
plan.
Company pension plans are getting fewer as the years go on;
companies are switching completely to 401K investment plans, pension plans may
not offered to employees which were hired after a certain date. If a person
wanted to supplement their retirement planned income with a pension it would be
critical to check with their company to see if they may invest in that pension
plan themselves, and receive company matching.
Start Planning Early
IRA is for individual retirement account, these accounts are
also tax sheltered and as a bonus they offer a tax deduction each year they are
contributed to; when money is invested it’s known as contributing, when money
is withdrawn it’s known as distribution of the funds. Social Security is not a
reliable part of any persons retirement plan any longer, anyone born after 1970
should count on not being able to collect social security until at east age 75,
at that rate of increase it isn’t likely that any one born after 1990 will have
any chance of collecting social security at all.
For this reason it is even more important for people,
especially those who hope to retire early to have a solid retirement plan from
a relatively young age or by 30 at the latest, and implement that retirement
plan. If a person doesn’t calculate
their needed living expenses accurately they may find themselves barely able to
afford their medications.
Money is an important part of a retirement plan; other
important factors to consider are what one will do after retirement and how
long one expects to live. There are fun
life expectancy calculators available on the internet and there are retirement
calculators also to help one determine exactly what their needs will be.
Knowing if one plans to travel, garden, volunteer, or any
thing else after they retire will help that person determine exactly how much
money is needed for retirement. Everyone
deserves a quality retirement; all it takes is planning, investing, and
following through with the retirement plan.
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