You can start planning for retirement at any age, but the earlier, the better. Start in your 20s to take advantage of tax benefits, compounding interest, and peace of mind when you are older.
Why You Need Retirement Planning Early
1. Life expectancy has increased significantly since 1960.
2. There could be challenges for Social Security retirement incomebenefits.
Retirement Goals You Should Consider
– Start saving early in a retirement account even if they are initially small amounts.
– Raise your contributions accounts.
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There are different retirement accounts, but they have a few things in common: they have tax advantages with varying growth scenarios depending on your preference.
Using pre-tax dollars, defer your federal and state taxes paid upon withdrawal, beginning age 59.5 years. Withdraws before that time will usually result in a 10% penalty.
Your 401K plan (not your IRA plan) allows you to borrow from your retirement assets and repay the amount with interest to your account rather than to a financial institution.
Starting early in your planning, even with small amounts, allows you to benefit from compounding growth through the years. Earning interest on interest adds significantly to your retirement fund.