Saving and Paying off for Retirement
So, when is the best time to start saving for retirement? The day you enter the working world obviously! Well, unfortunately, for many people this isn't obvious until they are suddenly near retirement age. For most people just finishing school and starting their careers retirement is usually one of the furthest things from their mind. They are young and don't picture themselves as senior citizens. Heck, in many cases their parents are not even quite there yet!
Regardless, there are opportunities young people should take advantage of. If your employer has a pension plan that's great! No decision there. Just stay long enough to be vested and you can look forward to a benefit when you retire. Most companies now offer 401Ks. It is wise to take advantage of the employer 401K as soon as you can. Up to the first 6% you save most employers will add matching funds typically from 25% to 100%. It is free money! If you would like to invest more than 6% of your income then I would put it into an IRA. Employers don't match deposits over 6%. Also 401Ks have limited investment options (typically 6 to 8 funds) while an IRA can have unlimited stocks, mutual funds, etc. to select from with more control over when to buy or sell.
When my wife and I retired we rolled all retirement accounts including pensions, 401Ks, and Simple IRAs into a rollover IRA for each of us. That gave us better control over our retirement savings. Unfortunately, raising 4 daughters we got a late start on saving. What really helped was “paying off for retirement”.
Paying off bills has more than one advantage. One, there is now more money to save. We didn't start saving seriously until we were in our mid fifties but as those bills got paid off our deposits into retirement savings went up. This was especially true after paying off the mortgage. That is one of those bills that seems like it is never coming to an end! Another advantage is that we retired debt free. We found this to be as important as saving. No mortgage, no car payments, one credit card that we pay off every month. We are actually able to live on Social Security with little need to tap into our savings yet. That's a good thing!
In summary, start saving as soon as you can and pay off those bills! If you can't start saving when you are young then make sure you start as soon as you are able. Then save aggressively! Take advantage of a Financial Adviser if needed.