Save For Retirement

You may be disappointed but this post is not going to give any hot tips on stocks or mutual funds. Find a good financial advisor and have him/her help you decide the best way to invest your money based on your situation. However, there is one point I would like to make. I will start with a simple question. When is the best time to start saving for retirement? NOW! Yesterday would have been better, but we can’t go back in time so start now. I don’t care how old you are. There is an old saying in the financial industry that says “time in the market is more important than market timing.” It means a lot of things to different people, but for this example it means get in early and stay for the long haul. Here’s how to do it.
The best way to save for retirement is through your employer, usually a 401k. The reason this is best is because it’s automatic and it comes out of your paycheck pretax. What does that mean to you? It means that you can contribute quite a bit of money to your plan without even noticing. Also, many employers will match employee contributions up to a certain level.
If your employer doesn’t offer a retirement plan you are not out of luck. There are other accounts that you can use. The most common is the IRA, individual retirement account. There are 2 types, Traditional and Roth. The difference is when you pay the taxes. Consult your financial advisor or tax preparer to determine which one is right for you.
So how much should you contribute? Most experts say that you should contribute an average of 15% of your pay through your entire career. I say you should contribute at least that and don’t count any employer match as a contribution, this should just be a bonus. This money is for you and your retirement, save as much as you can, contribute the maximum you are allowed if possible. You will thank yourself later.