In a phrase, comit to putting a set amount of money into an account each month.
That said, check to see if your employer has a 401 (k) plan which you can start contributing to, especially up to what the employer is matching. If this is not available then next I would recommend setting up a Roth IRA.
Now, the next big question is who to go to in order to set these up? If you are using the 401 (k), then work through your employer. If you are setting something up outside of the 401 (k), then you might look to working with a registered representative who can give you accurate information on an investment which suites your needs the best.
This is a great question.. one that shows that you thinking ahead!
There are many options to consider, as there is no one right answer. You may wish to speak with a "fee only" financial advisor who can help you with your planning and review your options. Life insurance agents and investment advisors may have their own agendas. Each should be able to answer specific questions you have regarding their products and applicability in retirement planning. Each has appropriate products.
Diversity is always a good idea. Remember that disability insurance, which will protect your income during your saving years, is vitally important.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
What are the best ways for someone under 30 to start planning for retirement? Well first get out of the planning phase and start the doing phase. Getting the habit of saving going is the best thing you can do for yourself. Time is the most important and actually cheapest thing you can invest. People say they will start saving when they pay off debt, but most people will carry some sort of debt throughout their working lives and beyond. Save and pay down debt. Getting the habit early means actually using less money.
The advantage of starting early is that you can do several things over time with different risk and reward profiles. You have time to pick and use safe, moderate and high risk investments because time works in your favor. Waiting until your older actually forces you into more risk situations as you try and make up for time by choosing higher risk investments because you need a high return. Getting started young, building your safety net allows you to take some risk because you have a fall back position, not a desperation position.
Senior Commercial and Annuity Specialist, Freedom Brokers, Marion, Carbondale, Harrisburg IL
I will answer this question as a dad. First, take the advice of one of the richest men in the world, Warren Buffet. His advice Rule 1 "don't lose". Rule 2 "refer to rule 1".
So cover your ass-etts first, buy yourself some decent insurance. if a calamity befalls you, you will not be financially out of the game. Somebody will suffer the calamity. It may be you.
1. For free life insurance advice, go to www.lfehappens.org and figure out how much you need now. Then buy it. Today. You are not bulletproof. You likely have a friend your age that has died. No second chance.
2. Car insurance. Since the average SUV you might hit costs lots more than the minimum coverages, don't get minimum liability coverage.
If you hit someone, and have less coverage than what you hit, you may end up paying for the rest of the SUV you hit out of pocket. While I am on it, buy a car you can afford to lose. Pay cash if you can. Cars are just the cost of getting to work. By paying cash, you can save 4,000 a year or more. A nice little pile.
Remember: We fly around all day in 30 year old airliners. Airlines maintain their planes meticulously. Maintain your vehicle and it will last. Fall in love with your spouse and your children, not your car.
3. Furniture, clothes, and other things do not go up in value. Pay cash for items that do not go up in value. If you can't pay cash, you can't afford it. Goodwill is open in every city. They always have some nice things.
4. You do not need cable or Satellite. Netflix is 1/10th the cost. Save 1000.00 a year.
5. Pack a lunch. You can go on a nice vacation with the 2,500.00 or so you will save over the year by not buying a 10.00 lunch.
6. Do you really need the latest cell phone and unlimited data plan? No, I didn't think so.
7.Little piles make big piles. Only when you have saved something can you plan for retirement. The easiest way to make a good retirement possible is to cover your losses, and spend less.
Once you have saved your backside risk and saved some capital, how you allocate your funds is less important than the discipline to do it. What gets watched grows in your life. Keep track of your money, using www.mint.com or some other software, and it will grow.
when you have big piles, you will by then have the knowledge of how to keep the money working. Let me say it again. Little piles make big piles. Be disciplined. Do so, and you will be comfortable in retirement. I have faith in you.
I love that you are thinking ahead- good job! Planning for retirement is so important and unfortunately too many young people are not thinking about it yet.
There are many steps you can take to put a retirement savings plan together. As mentioned above, 401k and IRA are great vehicles for building retirement savings accounts. Of course, learning healthy savings habits is going to benefit you in the long run. Doing so will make you eligible to obtain an annuity as an additional retirement planning tool that will provide you with a series of payments you cannot outlive.
Another strong piece of advice for planning your future security- get a life insurance policy. Yes, now. It's great if you have life insurance as a benefit through your employer HOWEVER, it is so important to have at least some whole life coverage that you own, in your name. Be sure to read the fine print of your work's life insurance. Also, be aware that your employer can change or take away that coverage at anytime. Qualifying for life insurance at a young age means you will be locked into the lowest rate available to you. The older you get, the more at risk you become and the more you will be paying. There are many different types of policies so be sure to speak to your agent to find what is best for your needs.
President, Insurance Associates Agency Inc., West Chester, OH
The easiest answer is to "do something". Save something. If your employer doesn't provide a 401K match, open up a Roth IRA and make regular, periodic deposits to the account. An IRA or non-qualified annuity are fine too. If you are in business and have no employees, open up a SEP (simplified employer pension). All of the latter have limits to the contributions and eligibility. You should consider setting aside your retirement contribution before you spend on anything else. I suggest saving 10-20%, with half of these funds liquid in demand savings accounts but only to the point you have enough on hand to equal 6 months of your living expenses. Then move more of the money into a tax preferred account until you max out your contribution limits. You can use life insurance as an asset accumulation vehicle as well and as you age you may be able to violate the TAMRA and turn the policies into modified endowment contracts that can become cash cows you fatten up for the future. Don't forget variable and fixed index accounts, and mutual funds and stock index accounts. This should give you enough food for research but I'd start with safe accounts and build out with an eye on avoiding the ravages of taxation until the government says you have met the limits of the tax preferenced acounts. Good luck. Oh, by the way, the longer you wait to start the harder it will be to accomplish money enough for retirement. I can prove mathematically that someone who starts today and maximizes their contributions for ten years cannot be eclipsed by someone waiting for ten years and starting the same process even if you quit and all other factors are equal. It's true, so, get started and good luck. You may be relying upon yourself more in retirement than you know today.
Insurance Adviser - Broker, SC Insurance Services, Oahu, Hawaii
Under 30 retirement planning! Great! And the answers above are all good. One thing I didn't notice in the above answers was that Whole Life insurance can be your best start all around. Whole life builds cash value that can be used for retirement income. Of course if you're married and or have children the life insurance itself is a protection for your family in case you die. And before anything else you need that protection. So even if you aren't married or have kids and never are or do, whole life has Guaranteed cash value growth that you don't get with other investments, so you can count on it. And you don't pay income tax on the growth! And if you do the smart thing and buy whole life from a Mutual company you can also have dividends added to your cash value while at the same time buying more insurance - without ever having to have another medical exam! Then in retirement you can have the cash value paid to you monthly, quarterly or annually to supplement whatever else you have for retirement income.
Licensed Independent Agent, Texas Insurance Alliance, Little Elm, TX
First, take care of your risks - health insurance, car insurance, home/renters insurance, life insurance.
Second, you need a stash of emergency cash. I make it rhyme so it's easy to remember. $1,000-$2,000 is a good start. Get a safe & start sticking it in there. Crap happens - someone in India wipes out your account and it takes a week or two to get the bank to give you back your money.
Third, open a savings account and save at least three months of your household expenses but six months is better. Again, crap happens and if you have to change jobs, you may need a 3-6 month cushion to find another job.
Fourth, max out your company's 401k to the extent of the company matching. That means for every dollar you put in, you DOUBLE your money guaranteed.
Fifth, this is where you get into long term financial planning. Do some networking, attend some seminars, ask friends. I personally like mutual funds & annuities but everyone will give you different answers. Find a plan that meets your risk tolerance and a company you trust. You will hear a lot of noise about fees but keep it in perspective - are you getting what you pay for? It's not like gasoline where you get the same gas no matter where you fill up so always look for the cheapest. Different products offer different services for different fees.
Diversification is the key. The 401 and Roth plans are still solid performers.....but you might want to look at annuities and IUL products. IUL products usually outperform the 401 k products over time and put more cash in the pocket. North American is someone to talk to that comes to mind.
Insurance Advisor, Lordship Insurance Services, California
Great question, the one you wish everyone under 30 would ask. Here are a few suggestions;
If you are 30 or under you have 35 plus years to save for retirement. You can use compound interest and time to build a sizable nest egg for retirement.
Begin with developing the mindset of spending a portion of your income and never exceed that portion. If you decide to save 10% for retirement then put the money up. It pays to have it in a savings account that you don't use until you can see where to put it. Options include;
1) Open an IRA account - deposit the maximum the IRS will allow you to deposit per year
2) If you work on a job with 401K enroll. The longer you stay there the more you will accumulate
3) Invest in an Insurance policy while you are still insurable and the cost is cheaper than when you are older. Choose a policy with cash accumulation.
4) Develop the mentality that this money does not exist. Resist the urge to spend it. Have savings and other resources that you can draw upon instead of your retirement.
With discipline and commitment you can build a great nest egg for retirement.
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That said, check to see if your employer has a 401 (k) plan which you can start contributing to, especially up to what the employer is matching. If this is not available then next I would recommend setting up a Roth IRA.
Now, the next big question is who to go to in order to set these up? If you are using the 401 (k), then work through your employer. If you are setting something up outside of the 401 (k), then you might look to working with a registered representative who can give you accurate information on an investment which suites your needs the best.
Let me know if you have any other questions.
There are many options to consider, as there is no one right answer. You may wish to speak with a "fee only" financial advisor who can help you with your planning and review your options. Life insurance agents and investment advisors may have their own agendas. Each should be able to answer specific questions you have regarding their products and applicability in retirement planning. Each has appropriate products.
Diversity is always a good idea. Remember that disability insurance, which will protect your income during your saving years, is vitally important.
The advantage of starting early is that you can do several things over time with different risk and reward profiles. You have time to pick and use safe, moderate and high risk investments because time works in your favor. Waiting until your older actually forces you into more risk situations as you try and make up for time by choosing higher risk investments because you need a high return. Getting started young, building your safety net allows you to take some risk because you have a fall back position, not a desperation position.
So cover your ass-etts first, buy yourself some decent insurance. if a calamity befalls you, you will not be financially out of the game. Somebody will suffer the calamity. It may be you.
1. For free life insurance advice, go to www.lfehappens.org and figure out how much you need now. Then buy it. Today. You are not bulletproof. You likely have a friend your age that has died. No second chance.
2. Car insurance. Since the average SUV you might hit costs lots more than the minimum coverages, don't get minimum liability coverage.
If you hit someone, and have less coverage than what you hit, you may end up paying for the rest of the SUV you hit out of pocket. While I am on it, buy a car you can afford to lose. Pay cash if you can. Cars are just the cost of getting to work. By paying cash, you can save 4,000 a year or more. A nice little pile.
Remember: We fly around all day in 30 year old airliners. Airlines maintain their planes meticulously. Maintain your vehicle and it will last. Fall in love with your spouse and your children, not your car.
3. Furniture, clothes, and other things do not go up in value. Pay cash for items that do not go up in value. If you can't pay cash, you can't afford it. Goodwill is open in every city. They always have some nice things.
4. You do not need cable or Satellite. Netflix is 1/10th the cost. Save 1000.00 a year.
5. Pack a lunch. You can go on a nice vacation with the 2,500.00 or so you will save over the year by not buying a 10.00 lunch.
6. Do you really need the latest cell phone and unlimited data plan? No, I didn't think so.
7.Little piles make big piles. Only when you have saved something can you plan for retirement. The easiest way to make a good retirement possible is to cover your losses, and spend less.
Once you have saved your backside risk and saved some capital, how you allocate your funds is less important than the discipline to do it. What gets watched grows in your life. Keep track of your money, using www.mint.com or some other software, and it will grow.
when you have big piles, you will by then have the knowledge of how to keep the money working. Let me say it again. Little piles make big piles. Be disciplined. Do so, and you will be comfortable in retirement. I have faith in you.
-dad
There are many steps you can take to put a retirement savings plan together. As mentioned above, 401k and IRA are great vehicles for building retirement savings accounts. Of course, learning healthy savings habits is going to benefit you in the long run. Doing so will make you eligible to obtain an annuity as an additional retirement planning tool that will provide you with a series of payments you cannot outlive.
Another strong piece of advice for planning your future security- get a life insurance policy. Yes, now. It's great if you have life insurance as a benefit through your employer HOWEVER, it is so important to have at least some whole life coverage that you own, in your name. Be sure to read the fine print of your work's life insurance. Also, be aware that your employer can change or take away that coverage at anytime. Qualifying for life insurance at a young age means you will be locked into the lowest rate available to you. The older you get, the more at risk you become and the more you will be paying. There are many different types of policies so be sure to speak to your agent to find what is best for your needs.
Good luck!
Second, you need a stash of emergency cash. I make it rhyme so it's easy to remember. $1,000-$2,000 is a good start. Get a safe & start sticking it in there. Crap happens - someone in India wipes out your account and it takes a week or two to get the bank to give you back your money.
Third, open a savings account and save at least three months of your household expenses but six months is better. Again, crap happens and if you have to change jobs, you may need a 3-6 month cushion to find another job.
Fourth, max out your company's 401k to the extent of the company matching. That means for every dollar you put in, you DOUBLE your money guaranteed.
Fifth, this is where you get into long term financial planning. Do some networking, attend some seminars, ask friends. I personally like mutual funds & annuities but everyone will give you different answers. Find a plan that meets your risk tolerance and a company you trust. You will hear a lot of noise about fees but keep it in perspective - are you getting what you pay for? It's not like gasoline where you get the same gas no matter where you fill up so always look for the cheapest. Different products offer different services for different fees.
If you are 30 or under you have 35 plus years to save for retirement. You can use compound interest and time to build a sizable nest egg for retirement.
Begin with developing the mindset of spending a portion of your income and never exceed that portion. If you decide to save 10% for retirement then put the money up. It pays to have it in a savings account that you don't use until you can see where to put it. Options include;
1) Open an IRA account - deposit the maximum the IRS will allow you to deposit per year
2) If you work on a job with 401K enroll. The longer you stay there the more you will accumulate
3) Invest in an Insurance policy while you are still insurable and the cost is cheaper than when you are older. Choose a policy with cash accumulation.
4) Develop the mentality that this money does not exist. Resist the urge to spend it. Have savings and other resources that you can draw upon instead of your retirement.
With discipline and commitment you can build a great nest egg for retirement.