auto and home insurance. Although you may have to
Retirement is a state of mind as well as a financial
pay for some of these resources, they offer financial
issue. You are not so much retiring from work as you protection in case of illness, accidents, or other
are moving into another stage of your life. Some people catastrophes.
call retirement a “new career.”
What do you want to do in that stage? Travel?
Relax? Move to a retirement community or to be near
grandchildren? Pursue a favorite hobby? Go fishing or
join a country club? Work part time or do volunteer
Planning for Retirement While You Are Still Young
etirement probably seems vague and far off at this stage of your life. Besides, you have Rother things to buy right now. Yet there are some crucial reasons to start preparing now for retirement.
You’ll probably have to pay for more of your own retirement than earlier generations. The sooner you get started, the better.
You have one huge ally — time. Let’s say that you put $1,000 at the beginning of each year into an IRA from age 20 through age 30 (11 years) and then never put in another dime. The account earns 7 percent annually. When you retire at age 65 you’ll have $168,515 in the account. A friend doesn’t start until age 30, but saves the same amount annually for 35 years straight. Despite putting in three times as much money, your friend’s account grows to only $147,914.
You can start small and grow. Even setting aside a small portion of your paycheck each month will pay off in big dollars later. Company retirement plans are the easiest way to save. If you’re not already in your employer’s plan, sign up.
You can afford to invest more aggressively. You have years to overcome the inevitable ups and downs of the stock market.
Developing the habit of saving for retirement is easier when you are young.
work? Go back to school? What is the outlook for your
health? Do you expect your family to take care of you
if you are unable to care for yourself? Do you want
to enter this stage of your life earlier than normal
retirement age or later?
The answers to these questions are crucial
when determining how much money you will need
for the retirement you desire — and how much you’ll
6
HOW’S YOUR
HFINANCIAL FITNESS?
need to save between now and then.
Let’s say you plan to retire early, with
no plans to work even part time.
You’ll need to build a larger nest egg
than if you retire later because you’ll
have to depend on it far longer.
Estimate How Much
You Need to Save For