When you are in your 20s and even into your 30s, you may not be concerned with retirement (though you should be thanks to the power of compounding interest). You may have more pressing financial concerns such as obtaining a good job and paying down student loan and credit card debt.
As you marry and have children, you may find yourself thinking ahead to the next 20 or 30 years when you retire. If you are at that point now, there are some steps you can take to help secure your financial future. Your future, retired, self will thank you years from now.
1. Start investing, the sooner the better. The earlier you start investing for retirement, the better. Thanks to the power of compound interest, you can actually invest a lot less money at a young age and end up with more money than a 40 year old who invests more but doesn’t start investing until 20 or 25 years before retirement.
2. Contribute to your employer sponsored retirement, especially if there is a match. An employer retirement match is free money! Don’t turn away free money because you don’t feel you have enough money to invest in retirement. Find the money, even if it means living in a smaller apartment for a few years.
Retirement plans vary, but do what you need to do to get the employer match. Some employers also require that you be vested before they will match your retirement savings. In many cases, even if you don’t really like the job, it is best to stay until you are vested and have the match.
3. Consider meeting with a financial advisor. Some people feel completely comfortable investing for themselves, but if you don’t, find a reputable financial advisor to assist you. Financial advisors can suggest mutual funds, stocks, bonds and other investment vehicles to consider based on your age, retirement date, and willingness to take risk. A good financial advisor can also help you rollover your 401(k) should you leave your job and discuss other options like annuities and the open market option.
4. Consider other investments besides retirement vehicles. As your retirement savings grows, you should consider other investments outside of retirement investing. As you approach retirement age, you’ll want a variety of investments, both in and out of retirement vehicles to see you through during your years after retirement.
While retirement may seem light years away right now, it is never too early to begin planning and investing for retirement. You’ll be very glad that you did.