Retirement is always a big issue. There is a point when you would “like” to stop working. My husband and I are working towards early retirement, and the first component to that is making sure that you set aside money in retirement accounts. Jackie Beck from TheDebtMyth.com discusses how you can set aside money for retirement now.
It’s normal to focus on daily tasks like taking care of your family and paying your bills instead of worrying about things in the distant future. Or even to get caught up with little things like finding those lost keys that mysteriously disappeared when you’re positive they were right there. They seem urgent, so you deal with them now.
Unfortunately, urgent does not always equal important.
So it’s time to take a little break from the day-to-day to look at one distant-but-important task: making sure now that your future self has enough money to live on in retirement.
Why save for retirement now?
No one wants to be a bag lady. You can give yourself the best shot at a bright financial future by saving for retirement right now.
In other words, no matter what your age the time to start is today. It’s not too late to start setting money aside if you haven’t been doing so already.
It’s like the Chinese proverb says, “The best time to plant a tree was twenty years ago. The second best time is now.”
What if you don’t want to retire?
No one knows what the years will bring. Life doesn’t always go our way, and sometimes (or often, if you’re me) we change our minds about what we would like.
According to the Retirement Confidence Survey, a large percent of retirees end up leaving the workforce earlier than they intended — many due to things like health problems, disabilities, or being downsized.
Better to prepare now, even if you figure you and your spouse won’t ever even want to retire. “That’s all well and good,” you might be thinking, “but what about the money?”
For my husband and I, one big barrier to saving for retirement was a lack of funds, especially when we were also dealing with other issues like layoffs and debt. But we started small anyway and then kept at it, making it a part of our budget. Better to save and invest even a tiny bit than nothing.
Basically, getting started is a matter of signing up for a retirement account and then making contributions to it each year. (Or each paycheck, if it’s an employer plan.)
In the US, there are several ways to save for retirement that are tax-advantaged. (This page lists them out, but 401k plans and IRAs are two common ones.)
We started by contributing the minimum amounts to our employer’s 401k plans, and then increasing those contributions a percent or two at a time. Later, we added Roth IRAs. By starting as small as possible and building from there, we were able to gradually adjust to the change in our budget. Kind of like the way you adjust when gas prices go up a little at a time.
Except with retirement contributions, our money is working for our future. Yours can too.
[custom_author=Jackie @ The Debt Myth]