By Dee Jason AVP, Riverton and Mt. Pulaski Branch Manager, NMLS #662874
With mortgages, car loans, social outings and other expenses, it’s easy to say “later” when it comes to contributing toward a retirement fund. However, the earlier you start, the more you will accumulate, which means there is no better time to start contributing to your retirement savings than right now, with these simple steps.
- Educate yourself on your options. 401(k)s, Roth IRAs and more. It can feel like a whole lot of numbers and letters that don’t make sense. With some funds, contributions are tax-deferred, which means your contributions aren’t taxed until you withdraw the money years later. With other funds, your money is subject to income taxes up front but isn’t taxed when you withdraw it. Also, some accounts have age requirements on withdrawals, so it’s important to do your homework as you make a decision on where to start socking away for those golden years. Don’t be afraid to speak to a financial consultant who can be extremely helpful when it comes to regulations and limitations for retirement accounts.
- Find an employer that supports your retirement goals. Some employers offer little to no retirement benefits, while for others, retirement is a large part of the employee benefits package. Many companies offer retirement funds, such as a 401(k), and some even match your contributions or systematically add in a certain percentage to your fund.
- Harness the power of compound interest. This means you need to start saving as early as possible! Starting when you’re young means all of your contributions will begin to earn interest sooner…and then both your contributions AND your earned interest will then continue to earn interest. CNN Money outlines a fantastic example of the power of compound interest when it comes to saving money.
- Set up automatic withdrawals. No matter what road you decide to take toward saving for retirement, put that money away automatically. Whether from your paycheck or your bank account, it’s practically effortless when you save automatically.
- Use windfalls to contribute. In order to boost your retirement savings, consider adding extra income like tax refund checks or company bonuses to bolster your funds and take advantage of compound interest.
In today’s world, people are living longer into retirement years, and in many cases now, saving for retirement is solely your personal responsibility as pension programs become more uncertain or rare. By considering what your retirement will look like and starting to save for that now, you’ll more likely be ready for a financially comfortable future.