27 min
Veteran Doctor - Episode 28 - It’s Never Too Early Or Late — Start Investing for Retirement Now! Veteran Doctor
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- Society & Culture
It’s Never Too Early Or Late — Start Investing for Retirement Now!
“Time is money.” — Benjamin Franklin
Although Benjamin Franklin may not have been referring to the effect that time has on money accumulating in an IRA, his words hold true with today’s investors. That is because time becomes one of the best allies for investors. But even if you did not start investing in your plan until later in life, there is another old saying that also holds true — “Better late than never.”
THREE FEATURES OF EMPLOYER RETIREMENT PLANS.
No matter where you are financially in your life or how much you already have in your retirement account, your employer’s retirement plan may have features that could help build your nest egg.
First, the advantage of compounding interest and tax-free earnings until withdrawal. Second, matching employer contributions. Third, the multiple choices of different funds to develop your financial plan.
The earlier you can put all these elements into effect, the better your financial future will be. For example, if you start at the age of 25 years old. Even if you do not have much income to spare, the smallest contribution could grow into something meaningful by retirement. For example, a two percent contribution from a $25,000 annual salary is just about $10 out of your weekly paycheck. If you increase your contribution by just two percent each year until you reach the maximum the company allows, for example, ten percent, and earn a ten percent return on your investments, you will have $1,437,543 by age 65.
INVESTING CAN BEGIN AT 40
So, many of you may not have had the good fortune of being able to start building financial nest eggs at such a young age. So, what happens when you turn 40 and realize you have not saved anything for retirement? Do not panic! You can still catch up, but you may need to push on the accelerator a little bit.
Initially, you will need to start contributing as much as possible to your plan, starting at five percent and increasing it two percent each year until you reach the maximum allotted by your company. Additionally, it will help invest in more aggressive funds, like stock funds, subject to short-term volatility but have historically generated higher long-term returns.
HOW YOUR SAVINGS COULD GROW
For people who start saving at age 40 and save steadily until age 65, it is still possible to accumulate a significant nest egg. So whether you are fresh out of college, approaching retirement, or somewhere in between, the best time to take advantage of your employer retirement plan is now!
How to catch up for starting late saving for retirement
Some people take more significant risks in the attempt to get bigger returns. But there is a more straightforward, more prudent way.
Many reasons explain why older Americans are financially ill-prepared for retirement.
Many people did not make enough money to set aside for their later years. Others experienced bad luck in their careers, poor financial role models, unhealthy personal-finance habits, or had did not have the proper knowledge on good money management.
Many Americans place other spending priorities ahead of financial retirement. Statistics show that only 43 percent of American workers participate in a retirement savings plan. Many people regret they did not start saving younger in life, forfeiting the vast compounding benefits.
Another example of compounding interest is displayed when a 25-year-old puts $10,000 in a stock index fund and only adds $500 a month until age 65; he or she would get $2.34 million. Thus, the 9 percent long-term historical average annual gain for U.S. stocks would compound over four decades, with only a total of $250,000 investment.
Late starting investors can take riskier approaches in their investment portfolios by looking at technology stocks — taking you to your goal quicker. However, focusing on saving rather than investing as you get older may be the more prudent and practical c
It’s Never Too Early Or Late — Start Investing for Retirement Now!
“Time is money.” — Benjamin Franklin
Although Benjamin Franklin may not have been referring to the effect that time has on money accumulating in an IRA, his words hold true with today’s investors. That is because time becomes one of the best allies for investors. But even if you did not start investing in your plan until later in life, there is another old saying that also holds true — “Better late than never.”
THREE FEATURES OF EMPLOYER RETIREMENT PLANS.
No matter where you are financially in your life or how much you already have in your retirement account, your employer’s retirement plan may have features that could help build your nest egg.
First, the advantage of compounding interest and tax-free earnings until withdrawal. Second, matching employer contributions. Third, the multiple choices of different funds to develop your financial plan.
The earlier you can put all these elements into effect, the better your financial future will be. For example, if you start at the age of 25 years old. Even if you do not have much income to spare, the smallest contribution could grow into something meaningful by retirement. For example, a two percent contribution from a $25,000 annual salary is just about $10 out of your weekly paycheck. If you increase your contribution by just two percent each year until you reach the maximum the company allows, for example, ten percent, and earn a ten percent return on your investments, you will have $1,437,543 by age 65.
INVESTING CAN BEGIN AT 40
So, many of you may not have had the good fortune of being able to start building financial nest eggs at such a young age. So, what happens when you turn 40 and realize you have not saved anything for retirement? Do not panic! You can still catch up, but you may need to push on the accelerator a little bit.
Initially, you will need to start contributing as much as possible to your plan, starting at five percent and increasing it two percent each year until you reach the maximum allotted by your company. Additionally, it will help invest in more aggressive funds, like stock funds, subject to short-term volatility but have historically generated higher long-term returns.
HOW YOUR SAVINGS COULD GROW
For people who start saving at age 40 and save steadily until age 65, it is still possible to accumulate a significant nest egg. So whether you are fresh out of college, approaching retirement, or somewhere in between, the best time to take advantage of your employer retirement plan is now!
How to catch up for starting late saving for retirement
Some people take more significant risks in the attempt to get bigger returns. But there is a more straightforward, more prudent way.
Many reasons explain why older Americans are financially ill-prepared for retirement.
Many people did not make enough money to set aside for their later years. Others experienced bad luck in their careers, poor financial role models, unhealthy personal-finance habits, or had did not have the proper knowledge on good money management.
Many Americans place other spending priorities ahead of financial retirement. Statistics show that only 43 percent of American workers participate in a retirement savings plan. Many people regret they did not start saving younger in life, forfeiting the vast compounding benefits.
Another example of compounding interest is displayed when a 25-year-old puts $10,000 in a stock index fund and only adds $500 a month until age 65; he or she would get $2.34 million. Thus, the 9 percent long-term historical average annual gain for U.S. stocks would compound over four decades, with only a total of $250,000 investment.
Late starting investors can take riskier approaches in their investment portfolios by looking at technology stocks — taking you to your goal quicker. However, focusing on saving rather than investing as you get older may be the more prudent and practical c
27 min