I ran across a nice read in the Forbes Woman section at Forbes.com written by LearnVest. In it, they talk about the 11 ways you’re sabotaging your future. We’re going to focus on some of the important ones, but please read the full article here.
Retirement is the biggest financial challenge for three main reasons: the amount needed is the biggest sum of money we have to save, it’s easier to put off and we need to commit decades into saving for retirement. Here are some of the excuses people give and some knowledge to contradict them:
“I can’t afford it.” We know times are tough, but they’ll be a lot tougher as you get older. I’m sure you can find $20 somewhere to contribute each month. If your job offers a 401k, start with a 1% contribution. If you have an IRA, put in an extra $20 per month. $20 per month for 30 years equals $7,200 which would grow to $24,000 earning 7%!
“I’m still young!” You are never too young to start saving for retirement! The longer you wait, the harder your retirement goal is to accomplish. The more you save today, the more money you’ll have later.
“I work hard for my money, I wanna spend it now!” The 50/20/30 rule allows you to have fun and save for retirement. Here that is in a nutshell:
- No more than 50% of your take-home pay should go toward your Essential Expenses, which include housing, transportation, groceries and utilities.
- At least 20% of your take-home pay should go to Financial Priorities, which include retirement contributions, savings contributions and debt payments. (Plus, if your employer offers a retirement plan, such as a 401(k) or a 403(b), you should be be contributing additional money toward retirement before your paycheck hits your bank account.)
- Lastly, no more than 30% of your take-home pay should go toward your Lifestyle Choices, which covers the fun you can have today: shopping, entertainment, personal care, the gym, gifts and more.
“I’m going to lose money in a 401k or IRA.” The market does fluctuate from year to year and 2012 wasn’t the best of years. But over the long haul, the market has returned about 7% on investment. You’re not going to find that kind of return elsewhere.
There’s a few to whet your whistle, please check out the entire article to see why you should start saving now. Also, check out this handy link when you decide to start saving!
Saving for retirement is a daunting task and you might not know exactly where to get started. The tax experts at the IRA Financial Group are waiting to hear from you to help you on your journey. Give them a all at 800.472.0646 or visit their website at www.irafinancialgroup.com.