For our first installment of "Money Matters," a financial help guide for Brides & Grooms, we are going to talk about saving for retirement. I know, I know. You say, "Damon, we are just getting married, and we have over 30 years until we retire, so why should I worry about saving for retirement now?" Let me explain.
Let's say you begin saving today, and you put away $100 every month for the next thirty years. At that time, you will have put away $36,000. Assuming an annual return of 8%, your savings will have amounted to in excess of $150,000!
On the other hand, let's say you wait a while before you start saving, and in ten years you start putting away $200 every month for the next twenty years. At that time you will have put away $48,000, over $12,000 more than you would have in the first example, but here is the surprise. Assuming the same annual increase of 8%, your savings will amount to only $118,000.
Why? Because of compound interest. This is just one example of how compound interest is so effective when you have time on your side. The longer you have between now and the time you will retire, the greater effect compound interest will have on your nest egg. But wait, it gets better! If you put that $100 every month into a Roth IRA (Individual Retirement Account), when you withdraw your money (after age 59 1/2) you will have to pay ZERO taxes on your profits. That's right, not only will you get the power of compound interest, but you also get the advantage of keeping it all to yourself! Uncle Sam gets nothing!
To get started you can seek the advice of a competent professional such as a financial planner (always recommended), or do some research of your own. You can start with some well known Mutual Fund companies such as T. Rowe Price, or Fidelity, both which offer no-load funds, and tons of research tools online for free.
Remember, it's never to early to start thinking about retirement... Talk to you next week!
~Damon
Share The Love: | 
|
0 comments:
Post a Comment