Today, we are featuring new blogger, Natalie from Debt and the Girl. Be sure to read her guest post and then hop on over to her blog to see the rest of her work!
You may have heard about the impending gloom and doom about the nightmare that is the nation’s current retirement situation. It seems that everyday there is a new article in the financial world about whether or not social security will be there when we are old enough to retire. Couple that with the growing number of people that are now saying that they won’t be able to retire until they are 80 or never at all.
I know it is enough to make me pray for a huge financial windfall that would leave me set up forever. Sadly, this doesn’t happen often in life. So it us up to YOU to make it happen.
Why bother, you may ask? You have too much financially on your plate right now, you might say. The kids need braces or the dog needs to go to the vet. Money doesn’t grow on trees! The truth is even putting aside a little money for retirement will be hugely beneficial down the line. Did you know that if you invested $200 a month at age 25 in a Roth IRA, you will have amassed almost half a million dollars (at 7% market interest). The numbers just don’t lie. The fact is that compound interest and time are your very best friends when it comes to saving. Think of them as two good friends that need the other one to truly flourish. You should think of your retirement savings as no different.
Only about 50% of the population has employers that will match retirement contributions-typically through a 401(k). If you don’t have this, then the next best option usually is a Roth IRA. The beauty of an IRA is that it is a tax-free income that can be withdrawn at age 59.5 without penalty. I personally use a Roth IRA to contribute to my own savings and I am by no way contributing millions, but I do contribute anyway. The great thing is that since I am still in my 20’s, there will be plenty of time for my money to grow. Take that, retirement!
Why should you care now about retirement when its still years away? Well, I can give you the perfect example: my parents. My mother and father worked hard all their life but they didn’t get serious about retiring till they were in their 40’s. They are now quickly approaching retirement age with maybe a tenth of what they should have. The house has not been paid off and it is a very real possibility that they may be working till they are very old age. Another example is that of my friend’s parents. The husband has been toiling away at his job doing 60 hour work weeks but has saved nearly nothing for retirement. My friend confided in me that the she now seriously expects that her parents will have to move in with her at some point to save costs. This is surprisingly becoming a more common occurrence. Don’t be a burden on your children. Take the actions now to make yourself financially independent.