Probably just like most 20-somethings I know, I'm freaked out about retirement. Okay, maybe not? But I had a moment on Wednesday when I was pretty sure I would be working until I was 85 because I need to up my retirement contributions.
Although there's a lot of different advice out there on how to come up with your retirement number, I think what stuck with me most was SAVE and DIVERSIFY.
- Put 15% of your income into a retirement fund(s). 15%? WHAT? Well, according to this article at MSN Money, it might not be as hard as you think. By taking advantage of pre-tax retirement and matching 401Ks, you're able to put away 15% without it all being your money.
- Currently, I have a 403B but after reading about more options for IRAs (individual retirement accounts, for those of us not so lingo savvy), I decided I'm also going to open a Roth IRA. A Roth IRA is an IRA meant for ordinary folks. You have limited contributions if you're single and make more than $95,000/year or married and have a joint income of $150,00/year. The best part - it grows tax-free. You contribute with post-tax dollars. You won't be taxed on interest as your save and when you withdraw, you won't be taxed on your income! There are some rules - your money has to come from earned income (no large gifts or inheritances) and you can't contribute more than $5,000/year (at least in 2009 for people under 50). This is a great article from Kiplinger about Roths that definitely go into more detail. After reading it, I'm sold!
Bottom line: if you're not saving for retirement already, do so now. The earlier you start, the better off you'll be and the more money you'll have to see the Eiffel Tower or drive across the US in that RV. Compound interest anybody?
Does anyone already contribute to a Roth IRA? How about any other retirement saving advice?