Saving for retirement is one thing that everyone needs to consider, as it is an essential long-term goal. Every working person, no matter how old he or she is, will finally reach retirement age. Once you person retires, they’ll no longer be earning the income that they were accustomed to receiving every pay period. In order to cope with this loss of income and still be in a position to pay bills, maintain their lifestyle, and survive in general, every working person needs to plan ahead.
Having a real stable retirement savings plan may help. However, you still need to find out where you can get your income security when you retire. Some of the sources of income for current retirees are as follows: Pension, Personal Savings, investments, Social Security, and part time or full time work.
And Even More…
The earlier you start planning and saving for your retirement, the better. If you’re in your 20’s or even your 30 ‘s, retirement may seem far away, and you may think you do not necessarily need to be afraid of it at this stage in time. You may find yourself juggling many competing priorities that require time and money. You may even think that there’s plenty of time for the American government to set the social security system in order that it can actually take care of you when you retire.
Well, while an optimist may hope for such a successful outcome, the truth is, the social insurance system isn’t designed to look after all your financial needs after retirement. The best thing to do is to save for your own retirement. If you’re young, you’re in a perfect position to maximize your savings for a much better potential outcome. That is because you’ve got time on your side. Time, when combined with money, is a very strong tool. First, there is the obvious-every year you save for retirement is another year’s worth of savings to add to your egg’s nest. Of course this has plenty of value in itself. For example, if you save $3, 000 every year for 20 years, versus saving the same number for only 10 years-well, do the math. More importantly, however, is the value that compounding adds to your investment.
Another very important reason to start saving for your retirement as quickly as possible is the tax benefit that you’ll enjoy. Most retirement savings account, whether they’re IRA’s or employer sponsored programs, are tax deferred. This means that the tax you would normally pay on the part of your income you contribute to your retirement savings is essentially given to you tax-free. This makes a big difference when combined with compounding. As you can see, there are a number of benefits to start saving early for your retirement, but do not forget-it is never too late.