Young Americans in their twenties have spent many years and often countless dollars training for their chosen career path. While planning now for retirement in the distant future seems unneeded if not unnecessary for many young workers who are just starting careers and families. At the same time beginning to plan now for their future will allow these individuals to prosper in the long run.
Many young people mistakenly assume social security will fund their retirement, but government funds are not guaranteed. Young Americans must take responsibility for their future. For retirement, most financial advisers recommend workers plan to save 75% of their yearly pre-retirement income in order to maintain their current standard of living. However, annual standard of living increases and skyrocketing medical expenses often require saving up to 95% of yearly pre-retirement income in order 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 ones 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 adviser, CPA, or a bank officer to get advice regarding selecting a planning and saving approach that best meets ones 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.
Many young people mistakenly assume social security will fund their retirement, but government funds are not guaranteed. Young Americans must take responsibility for their future. For retirement, most financial advisers recommend workers plan to save 75% of their yearly pre-retirement income in order to maintain their current standard of living. However, annual standard of living increases and skyrocketing medical expenses often require saving up to 95% of yearly pre-retirement income in order 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 ones 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 adviser, CPA, or a bank officer to get advice regarding selecting a planning and saving approach that best meets ones 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.
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If you would like to learn additional information regarding saving for retirement, visit Christopher Stanley's blog on 401k contribution limitswhere he discusses retirement guidelines including his predictions regarding the 2012 401k limits.