It’s never too early or too late to start planning for retirement and learning about different retirement savings accounts. The advantage of planning right out of the gate is time and compound interest are on your side for the long haul. However, if you’re starting later or making up for lost time, you simply have to be little more proactive.
Create a written plan
It’s time to bring your specific retirement goals into focus. Use an app, your favorite spreadsheet template, or old-school paper and pencil, to start outlining your retirement goals. With these goals in mind, continuing to follow your monthly budget will keep your spending and savings habits in line and on track.
More than likely your employer offers a 401(k) retirement account. If you haven’t already, sign up now and take advantage of it. Whether you are fully vested immediately or gradually based on years of employment, this type of automatic savings plan is the smartest way to save with minimal effort and maximum tax advantage. If your employer offers matching contributions, even better! This is free money and not something to leave on the table.
Other retirement savings accounts
On the flip side, look into Individual Retirement Accounts, or IRAs, if you have maxed out 401(k) contributions or if your employer does not offer a retirement savings plan. When looking at the fund choices available, look closely at the fees per fund. Do your homework here and compare. Wouldn’t you rather see your money grow over time than land in someone else’s pocket?
If you are younger and want to plan ahead, chances are a Roth IRA is perfect for you. While Roth IRA contributions are taxed now, the gains (interest accrued over time) and withdrawals made after age 59 ½ are tax-free. You will really appreciate not paying taxes on this money once you retire.
Stick to your goals and budget
Keep your retirement and savings goals in mind on a daily, weekly and monthly basis. By sticking to your budget, you are able to live within your means and not accrue more debt. Resolving outstanding debt, building an emergency fund and continuing to build savings in your retirement account should all be part of your initial written plan. If you receive unexpected income or a raise at work, channel it towards retirement savings where it can grow.
Get help from DCCU
If you need to fine-tune your monthly budget or are looking at opening your first IRA, let the staff at Dane County Credit Union help you move forward. Thinking about retirement can be intimidating but some times getting started is as easy as sitting down to create a written plan. And, don’t forget, DCCU is always there to help you.