It’s never too early to start thinking about retirement. In fact, the earlier you start, the better off you’ll be.
Start Planning for Retirement
On average, most Americans retire in their mid-60s. That’s when you’ll begin to be eligible for full social security benefits. Unfortunately, social security alone may not provide you with enough income to comfortably live out the rest of your life.
That’s why most investment gurus suggest that young adults should start thinking about retirement now. The easiest way to begin investing is to contribute to a retirement plan. If your employer offers this, it’s probably called a 401k. If your employer does not offer this, you can get an IRA through most banks and credit unions like Eastex Credit Union.
Regardless of which route you take, the best benefit is the tax advantages you’ll gain by saving for your retirement.
If you’re interested in saving for the future, here are three helpful tips to get you on the right track for retirement:
Contribute to a 401k
A 401k plan is a way to buy stocks, bonds and mutual funds directly out of your paycheck. Did you know that you might be contributing to a 401k and without even realizing it?
That’s because many employers will automatically enroll you in the company 401k plan as soon as you begin your job. The easiest way to find out is to look at your pay stub. If you have 401k deductions, you might be saving for retirement without even realizing it!
Best of all, your employer could be matching contributions to your 401k plan. Check with your HR representative to get the full details on the 401k match.
Sign Up For an IRA
The letters IRA simply stand for Individual Retirement Account. If you have a checking account, that’s the money you use for everyday expenses. If you have a savings account, that’s the account you use for savings.
An IRA is an account you use for retirement funds. Eastex can certainly hook you up with an IRA. The easiest way to get started is to stop by a branch and ask.
Unlike a checking or savings, when you put money into an IRA, you won’t be getting that money back out until you hit 60. That’s because when you contribute to an IRA, the money goes into the stock market before you pay taxes from your paycheck.
This allows you to contribute money into your retirement without having to pay Uncle Sam first. On top of that, you’ll start building compound interest from stocks and mutual funds. If you have a 401k plan, there isn’t anything saying you can’t have an IRA. You can easily have both types of accounts simultaneously.
Start Saving Now!
The best time to start saving for your retirement is right now. The earlier you start, the better off you’ll be when it comes time to retire.
Since retirement accounts gain interest from stocks and mutual funds, it isn’t uncommon for your investment to gain an average of 6% interest year over year.
If you started saving $100 a month at age 20 at 6% interest, you’d have well over a quarter-million dollars in your investment account at age 60.
If you started saving $200 a month at age 30 at 6% interest, you’d also have around a quarter-million dollars by age 60.
That’s why it is so important to start saving for retirement as early as possible. That small investment might seem like a lot now but it will really pay off down the road when you need it the most.
Eastex Credit Union is always here to help. Contact us for more tips on how to prepare for retirement or for any financial advice.