Lesson 4: Start Savings for Retirement

I know. I'm starting to sound like a broken record. Save. Save. Save. It's important! If you are working for a living and out of school, you must start saving for retirement now!

Hopefully you are in your early or mid-2o's and reading this. The earlier you start, the easier it is to have a wealthy retirement. That's because money saved now will have 35 - 40 years to grow.

If you are in your 30's and 40's, it becomes even more important to save now! Because your money has less time to grow before you need it.

Here's a savings calculator that you can play around with the numbers. A 25 year old person who puts away $100 a month earning 8% will have $350,000 after 40 years. A 40 year old person would have to contribute $375 per month for 25 years to earn that same $350,000.

At this point, don't worry if you're behind. The worst thing you can do is to do nothing because you feel you're too far behind. Even a little retirement savings is better than nothing. If you're starting late, figure out what the maximum you can contribute each month is, and then do it. Set it up to be deducted from your check automatically.

If your company offers a pre-tax retirement investment like a 401(k), get into that. If your company matches that with company funds, then absolutely invest whatever you have to to capture all the matching funds. That's free money! If not, you can invest on your own with IRAs through brokerages or banks.

When you do invest, invest in no-commission, low cost investments. Fidelity and Vanguard are low cost brokerages/fund company's that make it easy to start. You don't even have to worry about what to invest in. Fidelity offers Freedom funds and Vanguard offers Target funds that will automatically diversify your investments for you based on your projected retirement dates. These funds usually have a year in their name like Freedom 2040 or Target 2035.

Start saving for your retirement now! The sooner you start, the easier it will be, and the more you'll be able to have for your retirement. The alternative is to be completely dependent on Social Security, like so many of the poor elderly are. Take control and don't be a victim of your own fears.