SubscribeRetirement Planning Tips for Persons in Their 20s
Posted on Dec 04, 2007 under retirement planning |
During this period of your life, you are just learning how to deal with the idea of being on your own and possibly starting a family. Probably the most important thing you need to do is learn how to handle your finances and make the right decisions to meet your goals. Retirement is still many years away but if you do some planning now, you might be able to retire when you want with the lifestyle you dream about.
The following are some tips to help you get a start on your retirement goals and in the process, you are building some assets and learning how to handle your finances.
Open a Roth IRA
If you are employed, you might be able to open a Roth IRA for yourself and possibly your spouse. A Roth IRA will grow tax-free for years without any intervention from you. Once you open the Roth IRA, you can pretty much forget it until you are ready to retire. At age 59 ½, you can withdraw your investment along with any interest tax-free or you can let it continue to grow until you need or want to withdraw it. This is an excellent way to put aside money for your retirement and the earlier you open the Roth IRA the more time it will have to grow into a very nice nest egg.
Watch your credit card expenses.
Credit cards are terrific if used wisely. Credit cards can be very dangerous if not used wisely. Its so easy to buy all those things you ‘think’ you need just by swiping a piece of plastic but you need to be able to pay for these charges. Paying the minimum necessary payment each month will only put you further into debt. By watching how you use and pay your credit card expenses can help you develop good spending habits that will help you through out your life and especially when you retire.
Create and stick to a budget
Creating a budget lets you see what you income and expenses are and helps you live within your means. Sticking to a budget requires discipline and at times doing without things you might want. If you budget correctly, you shouldn’t have to do without the things you want for long though. If you can’t afford an item right away, save for it. Sometimes, once you have saved enough to buy something, it doesn’t seem nearly as important to have. Creating and sticking to a budget can help you be 20 something and not entirely broke.
Participate in your company retirement plan
Participating in your company retirement plan is one of the easiest ways to plan and save for retirement. If your company offers matching funds, contribute at least enough to get this entire match. Contributing to your company retirement plan is tax deferred and once you are vested, the entire amount can be rolled over if you should change jobs.
Save or invest a percentage of your income
I know, you are thinking if you participate in your company retirement plan, save for wants, stick to a budget, and watch your credit card expenses, what fun will you have. Good thinking. Being young and trying to make a living isn’t easy. We all seem to live for today and let tomorrow take care of itself but this isn’t always a good idea. Even if you save or invest 1% or 2% of your take-home pay, you can eventually create some wealth. Each week, I clean out my purse and put all the change into a jar and once a month, take the change to the bank and put it into a savings account. Its surprising how this counts up.
Even if you can only do one of the above tips, you will be on your way to reaching your retirement goals even if you don’t yet know what they are. It’s never too early to plan for your future.
source : www.about.com
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