What are the basic needed for a good retirement?
What are the things needed to be done by a person who've just started his career, in order to secure a good retirement? How much to save, what kind of insurance to follow, taxes to be paid, what must he do? Any suggestions?
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- Use a building block approach and grow your accounts. Stash three months worth of salary in a money market account, get a limited pay whole life insurance policy and watch its cash account grow and spread the rest of your investments through a diverse range of mutual funds, such as blue chip, international, and technology. Try to be aggressive early on with your investing while you still have a good risk tolerance and choose stock based funds over bond or income funds (you'll want to get into those in your 40's)
- If you have a 401k where you work, with employer matching, start there. Put in enough into the 401k to get the maximum matching from the employer. The best long-term investment is a mutual fund that follows the S & P 500 index. With any additional funds you might have, start a Roth IRA. All of the earnings are tax free.
- SAVE for your retirement, while you're young. JOIN the 401k at work. Pay in the maximum amount to get FULL matching by your employer. NEVER touch your retirement funds until age 59 1/2. Paying MAXIMUM amount into 401k for 5-10 years when first starting working, builds a good nest egg for retirement, even if you pay in less after the first 10 years. Term life insurance is cheaper than whole life and a better value. If you're not married, do you need it? It's cheaper if you buy while young. Putting money into your retirement account is great. It is money you are saving for yourself, your retirement, you get matching funds from your employer, which they don't have to put up if you don't pay in, and your contributions REDUCE your taxable income in the year made, and grow tax-free until retirement. Pay off your student loan debt in timely fashion. Avoid creating debt now. Start a savings account for vacations, for down payment on a house, for a new car, and in case of job ending. Just because you earn it, doesn't mean you should spend it.
- pay yourself first 10% min.in a tax deferred account.Get insurance but letthe person whos collecting pay the cost.find something,someone,and somewhere you absoulty love and hang tough.
- How much to save? As much as you can. The earlier you start the better. I suggest a minimum of 10%. Use as many tax deferred options as you can. 401K's abd IRA's. Insurance? For retirement insurance is not as important. Life insurance is for your dependents, not your retirement. Not to say you don't need to consider your dependents, but that's a different topic than your retirement. The insurance that might impact your retirement is insurance that protects you from catastrophic loss. Health insurance, disability insurance and liability insurance. Taxes? Taxes kill retirements. Avoid them as much as possible. As mentioned aboveuse as many tax deferred options as you can. Good luck!
