Thursday, March 14, 2013

Retirement: Where to Start

Since I convinced you yesterday that the time to start saving for retirement is NOW, I'm glad you are back.  First, any dollar you save today and don't start spending until you retire from employment is retirement savings in my book. Once you have decided you are ready, you want to know where to begin right?

Simple. You can stash your beginning retirement savings in some very simple places to start with. An envelope. A jar. A savings account. Yes, you can really start this basic. Sometimes it is the best place to start, as some types of accounts have minimum first time deposits. The most important thing about starting this simple is to make sure you know that it is for retirement and you don't mix it in with your spending money. Mark your envelope 'Retirement' in big red letters if need. I'm not kidding here. You have to hang on to this money for quite awhile. You need to remember what it is for.

Easy. Many, many employers have a retirement savings plan available for their employees. It usually requires filling out a form. This is likely with your human resources department, but could be the owner or manager of the business, too. The form is you directing your employer to hold part of your earnings from your paycheck to be deposited in some form of retirement investment. These savings plans are called many different names, often taken from the part of the tax code that authorizes them. You might hear it referred to as a 401(k), a 403(b), TSP (Thrift Savings Plan), or even a 457 plan. Yikes. Those all sound a little scary, right? Don't be afraid of the names.

Yes, your paycheck will be smaller or lower than if you didn't have some taken out for retirement. Darn. That part is disappointing, but it has to be done. It is for your future retirement! There is some good news though. Once you fill out that form, it is automatic. Every paycheck you earn from now on with this employer has you saving a little bit for retirement. You don't have to do much of anything else. You can do more, but it is not necessary. In fact, you could turn a blind eye to the whole thing after that, and then at age 65 open up your retirement statement and be amazed at how much money you saved. See? Easy!

Brave. You actually can save in an envelope AND join your employers saving plan at the same time. In fact, at some point you might want to step out and consider opening your own account outside of your employer. This is where you hear about retirement investments like IRA's (Individual Retirement Accounts) or Roth IRA's. This can be easy and tricky at the same time. The more you know and learn about these types of accounts, the better you will feel. But that envelope you are saving your retirement money in can only hold so much cash, so you have to be strong and take care of that money like you would a small child. You want it to be safe and you want it to grow.

The tricky part is deciding where to open this type of account. You can open one at your neighborhood bank or credit union. Online there is a wealth of information that can connect you to thousands of mutual fund companies and brokerage firms. Financial advisors and insurance agents can help you for a price, too. I personally prefer to be in charge of our retirement as we are the only ones that will care the most about the goal and the prices we pay. We look for companies that charge low fees and allow us to do most of our investing online and automatically.

The easy part about opening an account outside of your employer, is that it is once again a form or forms you fill out with your name, address, social security number, type of account, and so forth. The company you have chosen then opens an account, similar to a bank account, and gives you your account number. You can then send in checks or have your money auto invested each month from your checking account. It is up to you. Only you. To make sure you put money into this account. You cannot rely on your employer to do any of the work with this one. I know though you can make it happen. You are that brave and strong.

Three Choices. Three ideas on where to start saving for your retirement. They are available to you right now! Go out there and start saving for's your money you deserve to keep it.

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