How to Start a Retirement Fund
Anyone who wants to spend his retirement years in financial security would naturally want a retirement fund. Some people think it’s hard to start a fund, especially if they often have money problems, but actually it’s not so hard to start a retirement fund.
Start an IRA
Some people work for companies that have retirement plans, so luckily, they don’t have to worry about funds. But if your company is not offering any plans about retirement, it’s better to start an IRA or Individual Retirement Account. Anybody can have an IRA since there’s no age limit, but first you have to choose whether you want a Roth IRA or a traditional IRA. For more information about the differences of a Roth IRA and a traditional IRA, ask a bank or insurance/brokerage company in your area. They would explain the benefits of having an IRA.
Save up early
For those who are thinking of saving up to build a retirement fund, you can do it early. The advantage of starting early is that you do not have to save too much in a month. For example, if you are still in your 20s, you can save up $20 a month at least. As you get promoted and earn more money in your 30s and 40s, you can increase your retirement savings. Remember that the average American spends about 20 years in retirement, so you need to calculate your retirement costs for 20 years.
Do not just think of your usual needs, such as food and clothes, when you’re starting a retirement fund. Remember that your expenses will increase as you age, so consider all possibilities. Your retirement fund has to cover medical bills and medicine, just in case you get sick and need to be hospitalized.
Put your money in the bank
It’s preferable to manage your finances by opening multiple bank accounts. Some people have three accounts, one for savings, one for emergency funds, and one for retirement. Of course, if you have an employee retirement plan it is okay to not have a bank account on retirement, but it’s still preferable if you do. Your extra retirement money would make it possible for you to start a business, or you could put some of it in your emergency fund.
According to the US Department of Labor, only 43% of Americans calculate how much money they need for retirement. Don’t be among the 57% of Americans who don’t know much about starting a retirement fund. Open an IRA and start saving up to enjoy financial security in your retirement age.
Tags: retirement savings, financial security, retirement account, United States