One of the best pieces of financial advice you will receive as a young professional or even as a young individual with a job as a babysitter, a paperboy, or a fast-food crew, for that matter – is to save money for your retirement. In fact,it is never too early to save money for the financial challenges that adulthood can bring!
Make a Plan
Retirement planning is a must for every individual who wants to enjoy his/her retirement years in relative comfort. Keep these steps in mind:
- Determine your net worth (assets minus liabilities). You should have a positive figure but if you come up with a negative figure, then you should start earning more and spending less to get your net worth up to par,so to speak.
- Determine your retirement income,which should be between 70 and 90 percent of your pre-tax, pre-retirement salary, and then compute your annual contributions to your retirement plan to reach said goal.
- Get into the savings mindset. Look at your budget, trim the unnecessary purchases, and discuss your options in mortgages and insurances for higher savings. Start saving even a small amount each month – or better yet, take Warren Buffett’s best piece of financial advice: Spend less than you earn.
You may also hire a financial adviser for retirement planning purposes. Just make sure that you will, indeed, get the best value for your money by getting a realistic retirement plan coupled with sensible financial recommendations.
Go for Retirement Plans
Avoid the mistake of dismissing retirement plans in favor of bank savings. Keep in mind that, when your employer offers a contribution matching program for a retirement fund, it is similar to getting free money at a compound interest rate!
And who wants to turn such an attractive offer down? Definitely,not you!
You have so many choices in retirement plans so it is best to consult with a financial adviser regarding their pros and cons where your retirement plans are concerned. Your choices include the Individual Retirement Account (IRA), the 401(k) plan, and the Roth IRA as well as private retirement plans.
Invest Your Money
Consider your options in investments – bonds, stocks, futures, indexes, insurances, and marketable securities, for example. You will find that combining money in the bank with a solid retirement plan and market investments is the best route toward financial security in your retirement years.
Again, be sure to discuss your options with a reliable financial adviser!