You’re fabulous. You’re invincible. Never will there come a time when you are not raking in cash.
…or so you would like to think.
Retirement can seem like an abstract concept – kind of like traveling to Pluto or achieving complete inner peace – but when it comes right down to it there will probably come a time in your life when you just aren’t going to want to work anymore. Either you will figure the time has come to stop working so you can go out and enjoy the remainder of your life or instead your body will just tell you that it simply can’t work anymore. “You’re too old,” you body will say. “You can’t work.”
What do you do then? How do you still maintain a life without a steady stream of income coming in?
You should be saving for retirement right now. It doesn’t matter if you’re twenty-three or sixty-three. Something should be going toward an account earmarked for retirement. Even if it’s not a lot of money, it’s better than nothing.
How much you should save depends on a few different factors:
1. What is your current debt situation? If you are knee-deep in debt than retirement savings may not be your first priority right now. Some financial advisor recommend that people put savings on hold until they can get their debt under control. You can’t put off saving for retirement forever, though. At some point – preferably sooner than later – you’re going to have to start putting some money away.
2. How far away is retirement? If you are in your early twenties and you are still establishing yourself in a career then putting away a modest amount of money for retirement is still effective because you’ll have compound interest on your side. If you’re in your fifties and you don’t have much saved up for retirement then you’ll need to get aggressive.
3. What other financial factors are you dealing with? Maybe the current financial climate has you pinching pennies much more than you ever have, or perhaps you’re trying really hard to save for a down payment on a house or your child’s college education. Try to temper these goals with also saving for retirement.
Generally, you should aim to put at least 10-15% of your income into a retirement account. If you can’t put that much in a retirement account, put in what you can. If you can put in more, put in more.
Where should you stash your cash? Max out your 401k if the company you work for matches funds. You should also look into an IRA (Roth or Traditional). There are plenty of other options available, so be sure to have a chat with a financial advisor to figure out where your retirement money should go.
Save some money now so you can still enjoy your fabulousness after retiring.