Depending on your age, saving for retirement might seem like something that’s a financial goal for the distant future. In reality, it will come faster than you think, especially if you start a plan earlier. Look at it this way, you can actually retire sooner if you start a retirement plan earlier. Camino is here to discuss a few ways to save for retirement.
Start Saving as Early as Possible
Procrastination can be the enemy for accumulating wealth for retirement. An immensely effective way to begin saving for retirement is to start saving today. If you haven’t started putting away money before today, we recommend starting as soon as possible.
No matter the size of your paycheck, start allocating money. You’ve probably heard the saying let your money work for you. Well, it’s true. The power of compound interest can’t be overstated. Compound interest might sound complex, but it’s quite simple. Compound interest is when you earn interest on both the money you’ve saved and the interest you earn. These earnings are reinvested to generate more earnings.
The New York Times gives an excellent example of how money can work and grow for you when you start investing for your retirement investing at a younger age. If two people, ages 22 and 32, “put the same amount of money away each year ($5,000), earn the same return on their investments (6 percent annually) and stop saving upon retirement at the same age (67), one will end up with nearly twice as much money just by starting 10 years earlier.”
Budget Your Retirement Savings
On average, it’s suggested to put between 10 to 15% of your earnings toward retirement savings. Though that may seem fine on paper, it’s not plausible for everyone. In that case, make a budget and put away what you can. Just like anything else, the earlier you start the better you get at it. Then you’ll be more inclined to do it and stick with it.
Understand the Types of Retirement Savings Plans
With a mix of numbers and letters, retirement plans can read like a foreign language, from 401(k) to Roth and Traditional IRAs to 457s among others.
At Camino, we offer two main types of IRAs: a Roth and a traditional IRA. Each type of IRA has its own different advantages. IRA stands for individual retirement account and it allows you to save money for your retirement.
A traditional IRA allows you to contribute money pre-tax allowing your money to grow without paying taxes until you withdraw. A Roth IRA allows you to make post tax contributions to the account but allows the money to grow and be withdrawn tax-free. Saving for your retirement with a Camino Member Advisor can help.
Need Help with a Retirement Savings Plan? Let Camino Help Today!
Let Camino help you with your retirement savings plan today. The sooner you start planning, the sooner you can begin a happy retirement. Together, we can start building a road to your secure future. We want to help our members find the best option that works for them. Please go online at caminofcu.org, give us a call at 800-835-3400 to speak with one of our Member Advisors, or contact us for more information.