Twenty something young professionals have put in years of effort and often tens of thousands of dollars in training for their career. At the same time, thinking about planning now for a retirement that seems so far in the distant future is often the last concern for many young people who are just now beginning careers and starting a family. Despite this, forming a financial plan early on is critical to making the most of retirement later on down the road.
Most young people mistakenly assume Social Security will support their retirement, but public funds are not guaranteed. Young Americans must take responsibility for their future. For most workers, it is recommended by financial advisers to save approximately 75% of their pre-retirement income to maintain their current quality of life. But the annual standard of living increases and soaring medical costs often require saving up to 95% of annual pre-retirement income to live comfortably. Young people need a savings plan.
When young adults start putting away money early in their career they will let their funds to grow in value over time by harnessing the wonder of compound interest. Compare the retirement accounts of two typical retirees: one who started saving early and another who waited until his forties. The smart, early saver will likely have up to three times more in savings by the time he retires. The late saver may have to work additional years in order to compensate for his lower savings rate. Given these facts, it's a sensible idea to start saving early.
Putting away money for retirement can be totally painless. Many companies provide 401(k) retirement savings plans for their employees. The worker pays a portion of their compensation into the retirement account, often deducted directly from their paycheck, and often also receives matching funds from their employer. These automatic payroll deductions to one's 401(k) accounts are tax free until distribution at retirement, up to a certain limit. This form of retirement investment allows money to grow on autopilot with little effort involved on the employee's behalf.
Other ways to save for retirement are certificates of deposit, IRA, investments in real estate and money market accounts. Consult with a financial advisor, CPA, or a bank officer to get advice regarding selecting a planning and saving approach that best meets one's retirement needs and investment objectives. Young people who start saving wisely can enjoy their retirement comfortably and happily if they take a few simple steps.
Most young people mistakenly assume Social Security will support their retirement, but public funds are not guaranteed. Young Americans must take responsibility for their future. For most workers, it is recommended by financial advisers to save approximately 75% of their pre-retirement income to maintain their current quality of life. But the annual standard of living increases and soaring medical costs often require saving up to 95% of annual pre-retirement income to live comfortably. Young people need a savings plan.
When young adults start putting away money early in their career they will let their funds to grow in value over time by harnessing the wonder of compound interest. Compare the retirement accounts of two typical retirees: one who started saving early and another who waited until his forties. The smart, early saver will likely have up to three times more in savings by the time he retires. The late saver may have to work additional years in order to compensate for his lower savings rate. Given these facts, it's a sensible idea to start saving early.
Putting away money for retirement can be totally painless. Many companies provide 401(k) retirement savings plans for their employees. The worker pays a portion of their compensation into the retirement account, often deducted directly from their paycheck, and often also receives matching funds from their employer. These automatic payroll deductions to one's 401(k) accounts are tax free until distribution at retirement, up to a certain limit. This form of retirement investment allows money to grow on autopilot with little effort involved on the employee's behalf.
Other ways to save for retirement are certificates of deposit, IRA, investments in real estate and money market accounts. Consult with a financial advisor, CPA, or a bank officer to get advice regarding selecting a planning and saving approach that best meets one's retirement needs and investment objectives. Young people who start saving wisely can enjoy their retirement comfortably and happily if they take a few simple steps.
About the Author:
If you would like to read additional information regarding saving for retirement, check out Christopher Stanley's blog on 401k contribution limitswhere he discusses retirement guidelines including his predictions regarding the 2012 401k limits.
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