Saving and investing for retirement is no easy task, and the sooner you start the better off you will be later on down the road. The power of compound interest, and years worth of incremental savings will help you achieve a sound and comfortable retirement that will stay with you the duration of your life. You don’t want to save for years, retire, and then after 20 years you find that you are running out of money and need to return to work! Make sure you employ a sound retirement strategy that grows and adapts with you as you age.

First things first, if your employer offers a retirement account then you need to take advantage of it. Often times employers will offer a contribution match, and giving up that match is like giving up free money. If possible you should not only take advantage of the match, but also max out the account so that you can receive the full tax benefits as well. Too often people fail to consider the consequences in passing up these employer sponsored retirement plans.

Now that you are maxing out your employer sponsored plan you can start to invest in other retirement accounts. Other common types of accounts are SEP IRA’s, traditional IRA’s, Roth IRA’s, and now they even have a Roth 401k. There are so many options to choose from that it’s best to research each one as they all come with different investment options and tax benefits.  As someone who runs a side business I am eligible for a SEP IRA, but that’s something that average employee isn’t eligible for.  Make sure you talk to a retirement professional so that you can make sure to choose the right type of account for your situation.

Tax-deferred retirement accounts are a great way of saving, but they shouldn’t be the only way.  Opening an online brokerage account is a great idea so that you can take advantage of low cost ETF and mutual funds. These funds are a great way to balance the allocation of your portfolio, while at the same time keeping your costs to a minimum. Guarantee investment certificates is another place to store some of our money. What is a GIC you ask? It’s a very low risk investment that offers you a guaranteed rate of return over a specified period of time. The rate of return can vary depending on the term length,  and some are even based on a specific market index.

Regardless of how you decide to save and invest that important thing is that you start as soon as possible. The sooner you start the better off you will be in the end.

Filed under: Retirement Accounts

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