Too soon we get old, and too late we get smart is the old
Yiddish proverb. This applies to most people as they do
retirement planning. Retirement ideas range from
imagining yourself living in a life of luxury, playing
golf, taking 9 month vacations, and enjoying life, down to
living in a retirement community where your basic needs are
taken care of. Failing to plan for your retirement can
have very negative consequences on the quality of your
retired life.
To do proper retirement financial planning, you should
start early - that's the "too late smart" part of the
proverb. You're getting older every day - are you getting
smarter? Fortunately, there are retirement books that can
help you with this. One of the most important is "401(k)
Basics" by Motley Fool publishing. It will steer you into
how to make the most of a company 401(k) plan, while taking
an unsentimental retirement view - telling you that there
is no fast road to riches, only steady, regular savings and
investing will help ensure you against retirement losses.
Your retirement benefits should contain a mix of growth
funds early on, wealth preservation funds and income
generation tools as you age - this can be found online
through a number of retirement calculators, and will help
you plan the day when you can send your company your
retirement letters and say "I'll be on the golf course!"
Most retirement calculators are driven by an investing rule
called the Rule of 72 - take 72 and divide it by your rate
of return in points (for example, getting 6% on a savings
account or CD) and that will tell you how many years it
takes for your investment to double. In this case, 72
divided by 6 is 12, meaning that sitting an investment down
in a 6% account means it will double in 12 years.
Remember that slow and steady contributions win the day;
you can't rush this later in life. Start early, invest
everything you can afford to, and know that your money is
working for you in the long term. If you're eligible for a
401(k) program, you should take it - it benefits you in
multiple ways, from employee matching (which doubles your
investment) to being take out of your paycheck before taxes
(which is fundamentally giving you a 20-35% increase in the
net investment from doing it in post-tax income) to tax
deferral on the interest it accrues. A 401(k) is by far
and away the best retirement investment vehicle possible.
One thing you should not count on is Social Security; due
to changing demographics, we're going to be disbursing more
from Social Security than it takes in in about 5 to 10
years, and the fund will literally run out at the current
rate of contributions in thirty years. Presume that you're
on your own and plan accordingly.
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Find other articles related to Retirement Financial
Planning by Anthony Smith at:
http://retirementinformation4u.com
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