Before the turn of the 21st century, it was common for companies to offer their employees a pension. This pension system worked by shifting the burden of saving for retirement onto the employer instead of the employee. Many people found that they didn’t need to set aside money each month in order to plan for a comfortable retirement.
For the most part, all of that has changed. There are still industries that offer pensions to their longtime employees. You have to take responsibility for your own investing for retirement. Social security isn’t something that you should count on in order to retire comfortably. For younger generations, social security may not even be around. This means that you have to have long-term financial planning to see you through to retirement.
The first step is learning about retirement planning. While a four-year degree in accounting probably isn’t necessary, taking a course or two on how to better plan for retirement and manage money, in general, isn’t a bad idea. This can be augmented by getting reliable information from experienced financial planners. In fact, there is a financial planner in a San Diego firm that teach classes in-person and releases podcasts on a regular basis. Search these reliable sources out and learn everything possible from them about retirement.
For now, let’s focus on the basics of making financial plans for retirement. Many modern-day employers offer a 401k plan. This is something that you should take advantage of to help you meet your retirement goals. In some cases, your employer will match your contribution up to a certain amount. Even if you only invest the amount that is required to receive this full match, this is a start to get you on the path to retirement.
As you get older, consider upping the amount put into retirement. Use a retirement calculator to determine the amount of money that you will need to invest each month in order to reach your financial goals. This will give you some idea based on the current market trends and the cost of living. You don’t want to realize that you can’t retire when you want to because you don’t have enough money.
There are two types of IRAs that you should also consider investing in for retirement savings. A Roth IRA is one in which you invest money that you’ve already paid taxes on. This means that you can pull that money out after you’ve reached the age of 59 1/2 without having to pay any taxes.
The other type of IRA is a traditional IRA account. This works similar to a 401k account. You may want to consider this type of account if your employer doesn’t offer a 401k or doesn’t match your contributions. It works by you investing money into it before taxes. When you do retire, you will be required to pay taxes on the amount that you pull out.
Which type of account that you decide on will depend on your financial situation later in life. You will need to speculate on your tax burden once you’ve reached retirement age to determine which account would work in your best interests.
The rules of retirement have changed. You need to get ahead of the game so that you can retire in the lifestyle in which you’ve grown accustomed. This means that you need to have a plan in place for your retirement years. Don’t make the mistake of waiting too long to start saving for retirement like so many other people. Even if you’re older, you still have time to catch up and start investing for your long-term financial goals.
