Most working Americans dream of the day when they can finally retire. It’s nice to know that one day, you won’t have to get up early everyday just to trudge off to a job where you spend half of your life. Unfortunately, there is a growing trend around the country where people simply don’t have enough money to retire. You might see more and more senior citizens working because they cannot retire comfortably and have the money they need for bills and essentials. Even though it might feel like retirement is impossible with your current income, it is crucial that you begin saving up for it so that you’re able to one day get out of the work force.
Why Retirement is Important
Retirement allows you to enjoy the golden years of life without being tied to a job. For many older Americans, it can be downright impossible to hold down a full-time job when they’re well into their 60s and 70s. There have even been studies that have found that older working people get sick more often than people who are retired. In general, the sooner you start planning for your retirement, the more money you’ll have in any given fund and the more likely you’ll be to actually retire.
How to Successfully Save Up for Your Retirement
There are a range of methods to utilize when saving up for your retirement. You might be interested in IRA’s that are self-directed or opening up a 401K plan with your current employer. The key is to go with a fund that guarantees future growth and doesn’t become stagnant and unused. For instance, you need to open up a 401K with your place of employment only if you can roll the account over if you change jobs. If your boss won’t match what you put into the 401K plan, you might want to consider going with a different type of retirement fund.
IRAs are great because they allow you to save a lot of money while the bank matches everything you put into the account. IRAs cannot be withdrawn on before retirement, which is different from a 401K plan. With a 401K account, you can withdraw the money that’s in it whenever you want, though you’ll be hit with a pretty substantial tax penalty.
Apart from bank funds specific to retirement, you should also start putting money into a savings account. Savings accounts are ideal for all types of situations and because they’re your own account, you’ll never have to worry about taxes or other fees if you take money out. Make it a habit to put a little bit of money into a savings account with each paycheck and avoid using that money altogether.
Knowing When to Use Your Funds
In most states, the retirement age is anywhere from 62 to 65 years old. Once you reach retirement age, you’ll be able to collect Social Security and start withdrawing on funds you’ve had in any of the above mentioned accounts. There is absolutely no tax penalty for taking money out of a retirement fund once you reach the appropriate age. You should also go to the Social Security office a few months before you hit retirement age to go over all of the necessary paperwork needed to transition into retirement. The professionals at the office will help to answer any questions you might have and give you a detailed overview of what you should expect to be earning as a retiree. Being able to retire with a good amount of money to support yourself and your spouse is important and can be done with careful planning.
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