Senin, 08 April 2013

Four Tips For a Successful Retirement Plan

Life expectancies have steadily risen over the past century. An American adult can today expect to live to be around 80 years of age, if not older. Most people will not be able to work to such an advanced age. Therefore, some sort of planning for retirement is necessary. Here are four tips to get started on saving that should result in a successful retirement. Federal employees would have some peace of mind because of FERS disability retirement options. Others will not have this benefit.

Start Early
Many young adults start out with little in the way of forward thinking. Partying and enjoying life in the present are of more concern than what might happen 50 or 60 years down the road. The best way to accumulate a sizable amount of money is by starting early in life. The power of compound interest will make a dollar saved at age 20 worth much more than a dollar saved at age 50 when it comes time to retire.
Save Often
Saving on a regular basis is also important. Those who save a little bit each paycheck will be able to take advantage of dollar cost averaging if they are investing in mutual funds. This strategy buys more shares in a down market so that the returns are higher over the long run. Even those who have a simple annuity will not miss the money as much if they save on a regular basis and do not see the money in the first place.
Max out the Employer Match
Many employers will offer a match on employee contributions to a qualified retirement account like a 401k. Those who have this option should take advantage of it. If the match is 50 percent, the rate of return on investment is automatically 50 percent. Those who have employers who match dollar for dollar will double their money immediately.
Avoid the Temptation of Taking Money out
Some people might be tempted to take out money for a new car or a larger house. Of course, it is possible that retirement funds might be necessary for food in the case of a job loss. However, taking money out before retirement should be the last option considered. A new car now is not going to be worth the hassle of eating cat food during retirement. Delayed gratification should be the goal.

Saving for retirement can seem daunting. Many young people have no idea of where to start. These easy tips can help young workers who want to save for a prosperous and relatively carefree retirement.

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