Even if you’ve been through some financial setbacks, it is never too late to begin building assets for your retirement years. Depending on your individual circumstances, there are several different ways to decide what type of strategies will fit well into your retirement planning. The goal is to identify methods that you can implement immediately and then expand your planning when and as you are able to do so.
Start with the Basics
The recession changed a lot of the rules for financial planning in general. In terms of planning for retirement, many people lost a good share of their pensions. Coupled with the fact that a number of employers no longer contribute to pension plans or have done away with the plans altogether, this means it is up to you to build some sort of savings for the future.
Start with something you can do here and now, such as opening a savings account. If your employer offers direct deposit, make sure a set portion of your weekly or monthly paycheck goes directly into that account. Automated deposits mean you don’t have to remember to transfer the funds from your checking account. In addition, you learn how to budget without relying on those funds. While the interest is nothing to get excited about, you’ll begin to amass savings that help to provide a little more security over the years.
Individual Retirement Accounts
If your employer does not offer any type of pension plan, it is up to you to manage something on your own. Individual Retirement Accounts (IRAs) are a great way to get something started. There are two categories of IRAs to consider – traditional and Roth. Both approaches offer benefits that might be to your advantage. Your local banker can help you determine if a traditional or a Roth IRA is the best fit for your situation. Along with the bank, there are other financial institutions that can help you set up this type of account and aid in the development of a contribution schedule that allows you to deposit the maximum annual amount allowed by the IRS.
Individual 401(k) Plans
Another approach is to set up your own 401 (k). As with IRAs, there are a number of firms that can help you with this type of retirement plan. One of the benefits is that you can often begin with a minimum contribution and have some degree of control over the investments used to grow the balance. Assuming that you are able to read market conditions correctly and choose the best investment options, the balance in the account could grow at an impressive rate.
There is no one-size-fits-all when it comes to putting together a viable retirement plan. Choose a combination of strategies that is in line with your income level and seek to ensure you will have enough revenue to live comfortably after you leave the work force. Start with one type of account or fund and then add more to the roster when and as you can. At the end of a decade, you will be happily surprised at the progress made in so short a time.