Retirement

**leeleeaub** · 02-10-2006, 05:38 PM

Have any of you thought about retirement? I mean I worry constantly about being 41 and having nothing saved towards it. I don't know where to start or how to.

**Vannie** · 02-10-2006, 06:01 PM

January 31 was my first retirement anniversary. I retired after working 25 years in healthcare. I did not start saving until the mid 1980's. I wish I had started earlier. BUT when I did start saving I started with a Fixed Annuity account. They are not expensive, they do not pay a lot, mine is 5% return. Because it is fixed it never went higher than that, but it never went lower so when the stock market goes up and down. Your money stands at 5%. Putting a small amount the account every month brings a decent return. There is a penalty for taking money out before 59 1/2 which is the earliest time you can get into your account. An IRA account works pretty much the same except the rates are flexible. The penalties and frame is the same.

If you are a few dollars in a savings account every once in a while. You are probably not seeing a real return and you can get the money anytime just by going to the bank. Annuities and IRA's have restraints so you have to save.

You have to be 50 to join AARP but you can still sign up for their newsletters, etc. It is a good place to start if are really serious about saving for retirement. It was the best thing I ever did. http://www.aarp.org/money/financial_planning/

**dcompton** · 02-10-2006, 07:00 PM

Yes, I worry about it too -- a lot. I am 57, single, with no family to rely on for cushion, so what I don't provide myself won't be there. I have accumulated a little, but have not been in a position to put back much. My social security will be smaller than it should be (a long story and irrelevant) and at my current job (a state job), we do not pay into social security at all so it is frozen where it is. Instead the equivalent amount goes into a private sector retirement account, which means most of it is riding on the stock market -- which is really rather unnerving. But having a retirement plans available through work, makes the investment choices somewhat easier.

Barring the unexpected, I should have all the debt gone by late summer. Then my plan is to continue building a substantial emergency fund, a critical need for me, and to start really aggressively saving for retirement, with every extra penny earmarked for that. But it is playing catch-up, since I have been able to do little until now.

I certainly have no expertise in investing, so I can't advise you there. But I would definitely suggest setting even a little bit aside, whatever few dollars you could find. You could put it in a separate high yield internet savings account until there is enough to begin more formal investments. You still have a lot of years for it to grow, but the sooner started the better. That is the only reason I would want to be 41 again!

You are very smart to be thinking about retirement now. It is so terribly easy to lose sight of it amid all the urgent demands of the day. And don't despair -- a little can become a lot over time.

Donna

**staceyy** · 02-10-2006, 07:45 PM

Yes, I'm thinking about it. I'm sacrificing today to make sure I have a somewhat decent tomorrow. If your job has a 401k plan start there.

**amysh** · 02-10-2006, 07:54 PM

This is a topic that I have a little bit (okay, a lot actually) of experience in (my job involves retirement planning!), so if you all have any general questions, I would be glad to try and answer them.

Where to start?

If you don't have an emergency fund, build that up FIRST. Three to six months of living expenses, depending upon how secure your (or dhs) job is, how healthy you are, how much debt you have, etc.

After that, participating in an employer's retirement plan, if available. This is especially true if there is an employer match - that is, the employer will match any money you put in, up to a certain percentage. (It is not uncommon for an employer to offer a 50 to 100% match on the first 3 to 6% of an employee's salary. What does that mean? Okay...suppose you make $10,000 a year. If you put in 3% in to an employer's retirement plan, that's $300 you contribute. If your employer matches 100% up to 3%, they will put an additional $300 into your account. If they match 50% up to 3% of salary, they would contribute $150 in this case. )

If your employer matches, this is FABULOUS! If they don't, it doesn't mean you shouldn't participate - you still need to save for retirement.

Ultimate goal...maxing out the plan, if possible. (For 401ks, this is $15,000 this year; for other plans, the limits may be different.) Alternatively, ultimately contributing 10 - 15% of your income is a good goal. To start with...try 2 to 3%, or as much as an employer matches. Then keep increasing it every six months or year.

One caveat...check to see if you are paying sales commissions or other fees on the retirement plan. If the fees are high, you MIGHT be best off to put in enough money to get a match (if available) and putting the rest into an IRA. (It depends on how much you plan to contribute, what the fees are, and so forth.)

No employer retirement plan? Look into an IRA. Again, it depends upon your circumstances, but either a Roth (after tax) or traditional (lowers your taxable income) IRA are good choices. Look for no-load funds (e.g. T. Rowe Price or Vanguard). If you want advice on picking investments, there is LOTS of FREE help on the web, and I would recommend that to MOST people...but again, it depends on your circumstances. (YMMV.)

Which funds to pick? Good question...one rule of thumb: 100 - your age is the amount that should be invested in stocks (that is, equity/stock mutual funds); the rest should be in bonds. If you are conservative, you may want to go a little less in stocks/equities.

How to fund the IRA? You may be able to do one of two things. If you are paid by direct deposit, set up the IRA, and have part of your paycheck deposited directly into the IRA. Otherwise, you can have the IRA custodian (e.g. Vanguard or T. Rowe Price) automatically debit your account every (month/quarter). This makes it automatic...if it's not automatic, you are a lot less likely to actually do it.

Good luck...getting started is the hardest part.

Amy

**frugalandsimple** · 02-10-2006, 08:24 PM

I worry about if I'm saving enough for retirement. I'm in my mid-20's and started saving a few years ago towards retirement. I'm not counting on SS when I retire

**duckduckgoose007** · 02-10-2006, 10:15 PM

My best advise is to save every dollar you can. We have been retired since 1991. We never had any 401K's or anything like that.

I just learned to try and save whatever little was left over.

I am very afraid the young people today will need alot more than SS & a retirement plan. Money doesn't seem to go as far as it used to, and add to that how much everything costs today.

Plan...plan...plan as best you can.

**Jerseygirl** · 02-12-2006, 10:25 AM

I'm 35. Dh is 41--we both have 401ks, combined = about $75,000 right now. We also have a few dollars in stocks and 18 mos of our combined take home in savings. We live well below our means so dh will not have to keep his current job with the obscene commute for more than 10 more years. His child support payments will end in 8 years, we will have our house paid off around the same time and then have an extra year or so to pad our girls' college funds. At least for now that is the plan--we all know how it goes with the best laid plans though.