If you’ve done some research on retirement savings, you know that there are a lot of options out there and a lot of various factors to worry about and navigate correctly. But, the reality is that if you haven’t really started saving for retirement yet, then every one of those ifs, ands, buts, and maybes apply to people with a lot more retirement savings than you have. Stop reading. Get started now.
When To Start Saving for Retirement
There is an old saying that the best time to plant a tree was 20 years ago. The second best time is now.
Retirement savings works the same way. The best time to start saving for retirement is the day you started earning a paycheck. The next best time is now.
If you read up on retirement planning strategies and investing for retirement, you may develop paralysis about your retirement savings plan. This delay is way more costly than any “retirement planning mistake” you might make. So, stop researching.
Start Saving for Retirement Now Plan
If your employer offers a 401(k) plan, then we are done talking. Walk down to human resources, or better yet, go on the company website and fill out the forms. Start contributing to your 401k today, as much as you possibly can without taking yourself and your family to bankruptcy town. If you don’t know how much you can save, then start with 5 percent. If that turns out to be too much, you can lower it for your next paycheck. Most employers let you make as many adjustments as you like, as long as you give enough notice. Even if you don’t, you’ll just have to wait another pay period for your change to take effect.
But, what about tax deferral, versus tax free, and IRAs, and Roth IRAs, and … and… and…
All those things will matter, but not today. Today, all that matters is that you get started.
If you start contributing $1,000 per month today, in a year, you’ll have $12,000 saved. If you’re lucky, you’ll have some earnings too. Either way, that amount of money is a tiny drop in the bucket of what you’ll need for retirement. In other words, don’t worry about all of those “other” things out there. You’ll have plenty of time to figure them out. Once you hit $100,000 in your 401k, then come back and start looking into the ifs, ands, and buts, Until then, you are just wasting your time.
What If I Don’t Have a 401k Plan?
No 401k plan? Bummer.
But, the good news is that with no 401k plan, you can make deductible contributions to an IRA. Again, stop reading, and start now.
Go to Fidelity’s website. Click some buttons and eventually you will find the forms to open an IRA. Fill them out. Fill them out and submit them. NOW.
Link your checking account to the new IRA you just started and set an automatic contribution for each month, or each pay period. If you get paid on the 1st, then set your contribution for the 3rd, or something like that. Automatic is the key. Otherwise, there are too many ways to forget, or to need the extra money this month, or whatever else. Every contribution you miss is a big deal, especially these early contributions that will grow for years.
What Do I Invest In?
Whether it is a 401k or an IRA, don’t let the question of what to invest in slow you down. Get your money flowing into the account, that is step one. Do it.
Do it NOW.
As far as what to invest in, pick whatever your S&P 500 fund is. It might be called something like Large U.S. Stocks, or something like that. Yes, eventually you will want a diversified portfolio, but that isn’t important right now. Get the money going in, and don’t ever stop. You’ll have plenty of time to figure out what to invest in down the line. Heck I’ll write a retirement planning article about it for you, but you don’t need that today. Today, you need to open and account and start contributing.
In fact, stop reading. I’ll stop writing. Go. Open your account, now.