Retirement Planning Starts Today

Every working person dreams of retirement. If your company offers a retirement plan then you are very lucky. For most employees saving for retirement is something that they will have to do on their own and retirement planning starts today. 

The benefits may not seem that important when you are young but the closer you get to retirement age, the more apparent the benefits of saving for retirement will become.

There are many other benefits of saving for retirement, foremost among them is that you will be able to maintain your independence and not become a burden to your family. Retirement is the reward for years of working and supporting yourself and your family.

Beginning in the 20th century some employers offered pension plans to their employees. Many of these were a direct result of the rise in unionized jobs and were negotiated. For an entire generation it was a done deal, you would have a pension from the union, your employers or the government to support you in your retirement years.

This in addition to Social Security which is another of the 20th century’s great retirement benefits was enough to keep you comfortable as long as you didn’t do anything too extravagant. retirement

About twenty years ago things began to change. Employers stopped offering funded pensions and began letting employees contribute to 401ks and 403bs. Some employers pay a percent into these plans others do not. It has now become your job to take care of your retirement saving.

There are some real benefits to you of being in control of your finances. With the company pension plans employees had no say in how the pension funds were invested. This led to corruption and in some cases the entire fund was lost and employees who were depending on these pensions retired to find out that they had no income.

With your 401(k) or 403(b) you can control your own future. You can choose the amount you donate and how it will be invested. You also benefit from all the money that you are putting into your plan being tax exempt. The money will be deducted from your pay before you pay taxes. That does come with its own set of rules however.

You cannot just remove your money from the plan. If you do not only will you have to pay taxes but you will have to pay a 10% penalty. The penalty goes away after you turn 59 1/2. There are some hardship exemptions that the government accepts but you need to check with your employer to see if they allow hardship withdrawals.

Another way to save for retirement is a Roth IRA. The benefits are less because you pay your taxes upfront but the restrictions are also less. These days with people living longer, Social Security not a guarantee and the rise in the cost of living it is more important than ever to have a savings plan for retirement.

The benefits of saving for retirement are that you will be able to retire and to do the things you always dreamed about. What could be worse than not being able to afford to keep your home, pay for health insurance or do the things you have always dreamed of? It is never too late to start saving for retirement, if it hasn’t been a priority up until now, it is time to start to understand the benefits that saving for retirement will bring you.

Photo credit: Pixabay retirement.png

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