Today, we are featuring new blogger, Natalie from Debt and the Girl. Be sure to read her guest post and then hop on over to her blog to see the rest of her work!
You may have heard about the impending gloom and doom about the nightmare that is the nation’s current retirement situation. It seems that everyday there is a new article in the financial world about whether or not social security will be there when we are old enough to retire. Couple that with the growing number of people that are now saying that they won’t be able to retire until they are 80 or never at all.
I know it is enough to make me pray for a huge financial windfall that would leave me set up forever. Sadly, this doesn’t happen often in life. So it us up to YOU to make it happen.
Why bother, you may ask? You have too much financially on your plate right now, you might say. The kids need braces or the dog needs to go to the vet. Money doesn’t grow on trees! The truth is even putting aside a little money for retirement will be hugely beneficial down the line. Did you know that if you invested $200 a month at age 25 in a Roth IRA, you will have amassed almost half a million dollars (at 7% market interest). The numbers just don’t lie. The fact is that compound interest and time are your very best friends when it comes to saving. Think of them as two good friends that need the other one to truly flourish. You should think of your retirement savings as no different.
Only about 50% of the population has employers that will match retirement contributions-typically through a 401(k). If you don’t have this, then the next best option usually is a Roth IRA. The beauty of an IRA is that it is a tax-free income that can be withdrawn at age 59.5 without penalty. I personally use a Roth IRA to contribute to my own savings and I am by no way contributing millions, but I do contribute anyway. The great thing is that since I am still in my 20’s, there will be plenty of time for my money to grow. Take that, retirement!
Why should you care now about retirement when its still years away? Well, I can give you the perfect example: my parents. My mother and father worked hard all their life but they didn’t get serious about retiring till they were in their 40’s. They are now quickly approaching retirement age with maybe a tenth of what they should have. The house has not been paid off and it is a very real possibility that they may be working till they are very old age. Another example is that of my friend’s parents. The husband has been toiling away at his job doing 60 hour work weeks but has saved nearly nothing for retirement. My friend confided in me that the she now seriously expects that her parents will have to move in with her at some point to save costs. This is surprisingly becoming a more common occurrence. Don’t be a burden on your children. Take the actions now to make yourself financially independent.
5 comments
Starting your retirement savings early is key to having enough money to fund your retirement. I just read an article about how many of the baby boomers will not have enough to fund retirement and may need help from their children, that includes moving in!
Saving for retirement is in the forefront of my mind. My husband deployed this year, and it has put us in a much better position financially. Now we need to figure out how to stay in this good position!*
My husband’s job actually offers a matching Roth IRA – it’s crazy, so crazy that I didn’t believe it and actually made him take me with him to his HR office to ask some questions. He puts money into his Roth, his employers match 100% (up to 7.5% of his salary) by putting it into a traditional 401(k) plan. We started our retirement investments when we were 25 & 24, but to be fair, haven’t really worked to fully fund them annually until the past year.
Hi Erika! I found your blog recently and I’m really enjoying it. (I too choose to enjoy life / splurge occasionally while living frugally overall).
This is a great reminder to start retirement planning young. I struggle some days to remember that retirement is a priority – I’m only in my mid twenties! – but the reality is that life is only going to get more expensive, and I doubt that I’ll suddenly have no interest in living a fun, fulfilling life as soon as I hit retirement age.
We’re lucky in Australia because our employers legally have to contribute 9% of our salary value to a retirement fund.
I’ll have to head over to Debt and the Girl and see what else Natalie has to say 🙂
That’s why I keep trying to make viral videos. I only got lucky once and I didn’t quite set me up for retirement. However, it’s important to think of retirement in ones youth because the unknown in America is scary.