Retirement Planning In Your 20s
And 30s
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Begin Planning Now
During
your 20s and 30s, retirement may seem too distant
for attention. Even so, the best time to begin planning for it is now.
Why start so young?
- The sooner you begin, the better your chance of achieving your retirement goals.
- You cannot foresee how long you will be able to work. Injury, health problems or
other difficulties could interrupt your future earning and saving ability.
- You do not know how long retirement will be. With longer life expectancy,
you could need enough savings to last 20 to 30 years or more.
- Beginning early gives investments more time to grow through compounding.
Sometimes called “compound interest,” compounding is the process of generating
earnings on the reinvestment of interest or dividends.
Get Off To A Good Start
Even if you are making payments on college loans, beginning a new career or starting a family,
investing for retirement should be a priority. This article includes tips and
information to help you:
- Develop good financial habits.
- Set retirement goals.
- Understand and make the most of retirement accounts such as Individual Retirement
Accounts (IRAs), employer-sponsored 401(k) plans
or the Federal Thrift Savings Plan (TSP).
- Protect your financial future with insurance, wills and powers of attorney.
| Checklist For A Good Start |
- Monitor expenses and spend within a monthly budget.
- Pay yourself first.
- Establish an emergency fund. Keep 3–6 months of basic living expenses in a short-term savings account.
- Limit credit card debt.
- Contribute the maximum allowable to your 401(k) or similar retirement plan.
- Invest beyond employer- or government-sponsored plans by contributing to an IRA or other personal retirement account.
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Topics covered in this section are:
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Updated Thursday, January 07, 2010
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Basic Money Management
Basic Money Management