At Covenant Trust Company, we understand the importance of saving and investing for retirement. But we also understand that thinking about retirement can raise a lot of questions. So here are answers to a few basic retirement planning questions that you may have, or perhaps, questions you haven’t even thought of asking.
When should I start saving for retirement?
Start saving for retirement as soon as possible. Even if your retirement date is 30 or 40 years away, it’s never too early to start saving and investing for retirement. In fact, the earlier you start saving, the better; give your investments as much time to grow as you can.
You don’t need a lot of money to start saving. Even if you’re a high school student working a few hours over the weekend, setting aside $10 or $20 a paycheck can make a big difference by the time you retire thanks to compound interest.
How should I invest for retirement?
There are many different ways to start investing for retirement. There are several kinds of Individual Retirement Arrangements (better known as IRAs) that you can take advantage of, depending on your work situation. Most people are eligible to invest in a Traditional IRA or a ROTH IRA.
Does your employer offer a retirement plan, such as a 401(k)? If so, take full advantage of it. Many employers will match your contributions – don’t turn down free money. Contribute as much as you can to maximize the match.
How much should I save for retirement?
There’s no way to know exactly how much money you will need for retirement. You can try using an online calculator to estimate your financial needs, but the cost of retirement will depend on a variety of factors, some of which you can’t control or won’t know about until you’re near or in retirement. For example, you can probably decide where you will live. However, you don’t really know what your medical needs will be (and therefore, your medical costs) 20 or 30 years from now. Things can change over time, too. However, don’t let uncertainty and the possibility of change deter you from making a plan.
What should a retirement plan look like?
A good retirement plan should:
- Identify your goals and objectives
- Account for all aspects of retirement: living arrangements, a budget for fixed expenses, taxes, healthcare, debt, hobbies/entertainment, transportation, etc.
- Explore alternatives (be flexible to adjust to your changing needs)
- Employ the best ideas and practices to meet your needs and achieve your goals
Save and plan for retirement.
Your journey to retirement will be different from everyone else’s. As such, you need a retirement plan that is uniquely yours. So make a plan and start saving today!
Do you have more questions? Feel free to leave us a message below or contact us privately.
Covenant Trust Company is a financial services company owned by the Evangelical Covenant Church and its affiliates. Our services are available to anyone in need of asset management, retirement planning, legacy planning, gift planning, or trust services. In addition, we seek opportunities to encourage and promote healthy financial habits, and keep a personal finance blog atwww.covtrustblog.com.