Simple Steps to Start Planning Your Retirement Today
Thinking about retirement can feel overwhelming, especially when you are focused on managing today's bills. However, according to a recent study by the Employee Benefits Research Institute, just 21% of workers feel confident that they will have enough money for a comfortable retirement.
Whether you are just joining the workforce or have been working for years, making a plan is a great way to take control of your financial future. Here are a few simple things to consider when planning for retirement.
Time is on your side
When it comes to saving, starting early gives your money more time to grow. This happens through compound interest. Compound interest means you earn money on your original savings, plus money on the interest those savings have already made.
If you are just getting started today, that is perfectly okay! Every small step counts toward your financial goals.
Know Your Account Options
There are a few different retirement accounts you can use. It is important to select the plan that works best for your budget and goals.
401(k): If your employer offers a 401(k) plan, this can be a great place to start. You decide how much of your income you want to save, and it is automatically withdrawn from your paycheck. Just like how Perpay payments are made automatically from your paycheck, a 401(k) uses that same automatic direct deposit to build your savings effortlessly. Many employers even offer a "match," meaning they add money to your account based on what you put in. For example, many employers offer $0.50 for every dollar you contribute.
Individual Retirement Account (IRA): If your employer does not offer a 401(k), an IRA is an option to consider. You pick the financial institution and make your own investment choices.
Traditional IRA: You pay taxes later when you take the money out.
Roth IRA: You pay taxes upfront on the money you put in so, you will not be taxed when you take the money out in retirement.
Seek Out Helpful Guidance
Taking control of your finances does not have to be an overwhelming process. If you are unsure where to start, you might benefit from the help of a financial planner. With a simple plan and the right tools, you can finally take the next step toward the financial future you deserve.
Perpay does not provide financial, legal, or regulatory advice. The content is for general informational purposes only. Any views expressed are those of Perpay, not its partner institutions. We do not endorse or guarantee the accuracy of any linked third-party information. Links to Perpay products are advertisements. All external brand names belong to their respective owners.