I don’t know about you, but I’m looking forward to retirement. Remember that bucket list with all of that traveling on it? Maybe youth really is wasted on the young…..
First, a disclaimer: I am in no way a financial planner or advisor, nor do I have much knowledge beyond my own personal experience to draw from. So, take my advice with a lump of salt.
Second, for those of you who enjoy the fact that this is a food blog, we’ll be back to regularly scheduled programming after I can walk again.
That said, we’re off! Here’s a brief explanation into the world of retirement options as I see them:
Regardless of your employment status, the earlier you start investing for retirement, the better off you will be when you retire. Even if your current income means you can only spare a bit each month, it’s worth it! It will have that many more years to be accruing interest before you retire.
Because my employer doesn’t provide retirement options, I’m on my own, and thus in the camp of the self-employed and the freelancer. Because I’m not brave (or knowledgeable) enough to do my own thing, I chose the IRA option.
The traditional IRA is invested pre-tax. You don’t pay income taxes on it now, so you have a bit more money to invest, but then you have to fork over the dough (taxes) when you withdraw the money after you turn 59 1/2. The gamble you take is that you don’t know what tax rates will be when you retire.
A Roth IRA is invested after you pay your taxes on the money. So, despite the fact that you have less money to invest, you don’t have to pay any tax money when you withdraw. The cash money will be yours. Free and clear.
Clear as mud?
Here’s the bottom line: Start investing as soon as possible. It doesn’t have to be complicated. Do some research online to find a good place to start an IRA. Check out different companies (i.e. Vanguard) to see what they offer.
If you would feel more comfortable talking to a real person and being advised, Dave Ramsey has a list of endorsed local providers that can help you out. Your first appointment with them will be risk free. You won’t have to make any commitments or sign your life away. They will discuss your financial goals with you, assess your tolerance for risk, and set you on a course that will best suit you at this point in your life.
This is the route that I chose to go, as it was nice to have someone explain the hows and the whys to me. Also, this article says, “investors who purchased equity and fixed-income funds through professional investment advisors achieved higher returns than those who purchased funds on their own. “
Ultimately, it’s up to you what you choose to do. The key is that you DO something. So, start googling. Ask questions of people that are older than you are. Learn things. And then start saving for the rock and roll lifestyle you want to have once you retire.