When we hear the term “retirement” it is typically thought of as just a far-off lifestyle change and being free from working. Did you know you can start planning and putting money aside now and easily without having to do anything too lengthy? I definitely was not aware of it and only connected retirement mentally with that of sitting with a group of old friends chanting bingo numbers. I started working in finance and banking about a year ago and it opened up a whole new perspective for me.
Early saving for retirement now, become millionaire later
In younger years especially when I first passed through the gate of my early 20’s retirement was the last thing on my mind. I was more focused on saving up for a new car or a trip that I’ve been planning on for years.
It wasn’t until my boss pulled myself and coworkers aside offering our yearly opt in to our 401k that I was even made aware that I could start putting money towards my retirement. I was hesitant at first especially given that I was living paycheck to paycheck. I did a little bit more inquiry and research about 401k’s and retirement planning and oh boy did that give me a peek into the future.
My boss told me that research has shown if I started putting money into a 401k starting at age 20 I could have retired as a millionaire. Yes, a millionaire.
It was a shock to myself and my heart started pounding. It was hard to imagine that in 40+ years I could’ve been dining at a very exquisite restaurant compared to my ramen noodle couch meal I had planned for that night.
Finding the right percentage for you
I quickly ran to my computer and opened up my work email and said a very sure “yes I am interested in a 401k”. I was advised to start out small and put the percentage around 3% or more had my heart desired it. I started out with the suggested 3% taken out of my biweekly paycheck which is around 30 to 40 dollars every two weeks.
Now mind you that I had to reel myself back into a reality check for a moment. I would’ve loved to put 20% plus percent towards my future.
However, my current bills were still putting their hands out for money. It was sort of daunting yet exciting to start supporting my future self by giving up just a small portion of my current income.
The daunting portion was deciding between the different kinds of retirement savings plans are offered.
What is a retirement savings plan
Now we’re going to get technical for a moment and dig into a little bit what a 401k even is and what the options I mentioned consist of. Merriam Webster’s dictionary states that 401k is “A retirement account to which employee and employer contribute, on which taxes are deferred until withdrawal, and for which the employee usually selects the types of investments”.
Ah yes that dreaded “T” word that we all despise thinking about. Taxes are an important part however deciding what type of a retirement product you’d like to invest in.
The types of retirement savings are Traditional, Roth 401(k), 403(b) and a 457. Now I know you’re sitting there most likely intimidated by the titles and thinking it is too complex. It can be complex but it doesn’t have to be.
If you are employed your employer may provide a retirement savings plan and could even match a percentage of what you are contributing to your decided plan. Most financial institutions provide a free service to meet with a financial service advisor to discuss and go over what option is best for you. I highly recommend if your financial institution provides it to look into sitting down with a financial consultant to discuss your savings and financial goals.
Start saving for your dream retirement life
Retirement may sound too complex and seem like it is too early or late to start even thinking about. However if you want to live comfortably and prosper in the future you can start saving at any time. There are many different options for retirement savings plans which can be available through a financial institution or your employer. Starting out small could make a huge difference in your financial future. Saving now could make eating at an exquisite restaurant after an amazing night of bingo or event with friends doesn’t seem so much like a dream.