Tips And Tricks To Save for Retirement
Key Takeaways
Start now so compounding can do the heavy lifting
Saving earlier gives your money more time to grow. Even small, consistent contributions can add up significantly over years and decades.
Get the full value of workplace retirement benefits
If you have access to a 401(k) or similar plan, contribute enough to capture any employer match. That match is an immediate return on your savings.
Pick an investment mix that matches your timeline
Diversify across investments so you are not relying on one type of asset. As retirement gets closer, reduce risk to help protect what you have built.
Why Gen Y Should Save Now For Retirement
You're finally on your own and out of your parents' nest, so the last thing on your mind is retirement. If you're like most young adults, you might want to spend your money on a few iTunes songs, gourmet coffee and tickets for your favorite college or NFL, NBA, NHL, MLB and MLS teams.
While having a social life is great, it would be even greater to have a solid financial future. The earlier you start saving for retirement, the more money you'll have to keep living the lifestyle you'll be accustomed to.
Here are a few reasons you should start now to invest in your retirement plan:
- Employer Match Benefit or Profit-Sharing – Many companies offer to match a certain percentage of an employee's contributions or contribute an amount from an employee profit-sharing or similar plan.
- Pre-tax money – If you decide to start a 401k plan, contributions come directly from your paycheck into your retirement account. It continues to grow tax-free until you start making withdrawals.
- Compound interest – Your investments will grow over time because you'll have a longer time to compound. In other words, a 22-year-old who saves $100 per month will have more value than a 42-year-old starting to save at twice the rate.
- Personal control – You have personal control over how much is contributed and when to stop saving or start saving more.
- Availability – If you change jobs, you have the option to move your retirement account to an IRA or roll it over to a new employer's retirement plan tax-free.
Do you know how much your retirement can grow over the years? You can use this retirement income calculator to help you see where you are in relation to your retirement goals and options to consider to help reach your target.
(Source: Vanguard)
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