The Twenty's: Retirement is not even in your vocabulary probably. Although, you may be wishing you could retire your debt of student loans. It is very important to start saving for your retirement as soon as possible. Not sure if my pal Suze Orman would agree, but you should at least start funding your 401K and then start working on the paying down of your student debt.
As we discussed before don't turn down the free money your employer gives you in form of a match for your contributions. Stash away as much as you can, but if you make $30,000 a year, saving 6% is only $35 a week. That adds up huge over time.
The reason you can have more risk tolerance at this time is when there are downturns in the economy it can be a boon to your 401K. If you have a long investment horizon you can afford to wait for a recovery while buying stocks and mutual funds at a reduced price.
The Thirties: At this point you need to start paying attention to your investments. Keeping your 401K in shape with the appropriate mix of risk and growth takes some work and diligence. Start managing your investments early or as we have discussed before get help from people who can do it for you.
The Forties: Most people don't contribute as much as they should at this point in their lives. The reason...they are saving for their children's education. This might sound bad, but you should be worrying about yourself. You can get car loans, you can get college loans, but you can't get retirement loans.
Save as much as you can. Your savings, including your companies match, should equal 10% of your income.
The Fifties: All your hard earned savings can get beat up by a down turned market.
Once you hit 50, you can make catchup contributions. Starting in 2009, you can put away an extra $5,500 into your 401K every year.
Most investors tend to leave their portfolios on autopilot. In the decade before you retire it is important to be sure you are controlling for risk and positioning your portfolio to ride out the down times.
The Sixties: When to retire. 55% of employees over the age of 60 say they will probably postpone retirement. Even though you have invested in a 401K for decades it may not be enough to retire on. Social Security may help fulfill the slack, but some of us may never see it. It is important to find other investment options as well.
Plan for longevity and for inflation. That means keeping a portion of your portfolio in equities even after retirement.
[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]
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