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How to Start Planning for Retirement if You Haven't Already


It's never too early or too late to start planning for retirement.

In fact, the sooner you begin planning, the better off you'll be. Here are three retirement planning tips to keep in mind:

1. Start early and save as much as you can.
If you're under the age 50, you have plenty of time before you retire. Start thinking about the kind of lifestyle you'd like to live after you stop working or reduce the number of hours you work. Do you imagine yourself owning a nice house on a beach? If so, you'll need to prepare yourself financially.

Wealth is built by consistently saving and earning compound interest, which is interest earned on your interest over many years. Saving for retirement in your 20s, 30s and 40s will help ensure that you have enough money to live comfortably later in life. If you're over 50, you have some catching up to do, but it's not too late and you can still save for a great life after retirement.

Enroll in your employer's retirement plan (401(k) or similar plan, if available, and opt-in to receive contribution matches if they are offered. Taking full advantage of your employer's retirement plan is a great way to boost your savings.

You can also save independently (if you don't have a workplace savings option or want to save in addition to your office's retirement plan) by contributing to an Individual Retirement Account (IRA). Within IRS limits, you can either contribute to your IRA before taxes and pay taxes on withdrawals in retirement (a traditional IRA), or contribute money after taxes have deducted and withdraw contributions and earnings tax-free in retirement.

2. If you didn't start saving for retirement right away, it's still not too late to start.
So you didn't start saving for retirement in your 20s, that's okay! You can join your employer's 401(k) or similar plan at any point, if one is offered. Just notify the Human Resources or payroll department, and they will give you the information you need to get started.

If you want to open an IRA, you can start your account any time. Choose a provider that works for you. A good rule of thumb is to look for an IRA with fees below 1 percent. You can choose an online broker and make your own investments, or you can get help and use a service that builds and maintains a diversified investment portfolio for you.

Most savers are well-served by investing in a no-load, low-cost, broadly diversified mutual fund targeted at their expected retirement date. Target date funds are designed to be "set it and forget it" investments, taking greater risk with higher potential payoffs early on, but becoming more conservative the closer you get to retirement when you depend on the money. You can open an IRA at a bank, brokerage or mutual fund.

Another trick is to increase your contribution rate with each pay raise. The more money you make, the more you should save.

3. If you're over 50 years old, it's STILL not too late to start saving for retirement.
If you're starting your retirement savings later on in life, you still have time. Retirement plans offer special benefits called catch-up contributions for people who start saving for retirement after the age of 50. Take advantage of the working years you still have and maximize your contributions.

Your 401(k), if you have one, allows you to save an additional $1,000 each year if you're over 50 years old. You can also contribute an extra $6,000 as catch-up contributions into your 401(k) in 2018. That means you can save up to $24,500 instead of the standard $18,500 limit for retirement.

Try to work overtime so you can make more money, or consider working a part-time job that's not strenuous. The more money you make, the more you can set aside for retirement.

Planning for retirement might seem confusing, but once you get the ball rolling, you'll see it's not so bad. Set a goal, make a plan and save automatically.


























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