Retirement financial planningRetirement financial planning is probably the nowhere in your immediate plans if you’re anywhere in your twenties.  However, this is actually the best time to start planning because you have little to no debt and besides there’s just not a lot of pressure on you at this time in your life.  The last thing you should want to happen is not being able to financially care for yourself as you get up in age.

Time goes by really fast and the worst mistake that you can make while you’re young is to think that its too early to begin saving for retirement.  Your 30’s 40’s and 50’s will be here before you know it.  Yes, you have a job today but with all of the uncertainty in the economy will that remain to be true five years from now?  Don’t leave your retirement financial planning up to chance, start saving now while your opportunity is ripe.

One of the first things you should do is take advantage of your company sponsored 401(k) retirement plan.  Sock away as much of money as possible into the plan and live off the rest.  We suggest contributing the maximum amount allowed, as these are pretax dollars plus there’s a great chance that your employer will match your contribution.  If you can put 5% to 10% of your gross income into a retirement plan while you’re in your 20’s you’ve jumpstarted your retirement while all your friends are spending their money on consumer items.

The next thing to investigate is an Individual Retirement Account (IRA).  You can choose either a Roth IRA or a Traditional IRA.  Although, there is some debate about which one is better most financial advisors lean toward the Roth IRA especially for those individuals that are young.  The only major drawback about the Roth IRA is that the money you contribute is taxed at the time of contribution.  However, on the plus side its tax free to you when you begin to withdraw it out at retirement as long as you follow the IRS guidelines.

Another great habit for you to form early is to closely monitor your spending habits.  Most people your age are notorious for blowing their money on frivolous things and activities.  Blowing money every week on clothes, booze and partying is not a good way to spend your money if you want to secure your future.  Instead, consider depositing that same money into some type of investment or interest bearing savings account.  A small deposit made consistently overtime begins to add up.

Retirement financial planning done early is the best way to make sure that your future is secure.  The earlier you can begin saving money, the more you are guaranteed to have when you retire.  Don’t succumb to the desire of tapping into your retirement account once it begins to build up.  This retirement money is for retirement only and should not be used to fund a trip overseas or to buy an expensive sports car.  Simply make consistent deposits into your savings and investment accounts and then forget about them.

Related posts:

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  2. Difference Between A Roth And Traditional IRA
  3. Planning Your Retirement Annuity
  4. Planning For Retirement: 3 Tips To Keep In Mind
  5. Early Retirement Planning: 4 Simple Tips

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