Why saving for retirement?
There is a potential threat in the US economy. The upper middle class, considered to have a good financial position and be able to support the entire national economy by its consumption expenditure, is very vulnerable as an economic pillar, actually. They make more money but save too little. Once they have an accident or retire, they had to cut spending quickly. As a result, it is never too early, or too late to start saving for retirement. To start save for your retirement is never complicated. It only requires conviction and some goodwill.
How to save?
But how to save for retirement? Do you just put your money in the bank, earning minimal interests? That is not wise. You have to invest. The best retirement tool is an employee-sponsored 401k plan. If possible, you want to contribute the maximum amount possible into your 401k. If this is not feasible, try to at least deposit enough to qualify for any matching program that your employer offers. If there is a 401k program available to you, make sure to take full advantage of it.
But for those whose employer does not offer a 401k, or if you are self-employed, you will want to open an IRA–individual retirement account. Even if there is no employee match, having these funds earmarked for retirement will give you peace of mind along with some tax advantages. Deposit as much as you can each year while increasing the amount until you reach the maximum allowable annual contribution. Be aware that any investments tied to the stock market will fluctuate and it is important to know your risk tolerance level before opening an account.
Retirement calculators are a good way to learn more about how your savings habits of today can impact your future. It is unlikely that Social Security will completely cover all of your expenses after you are retired. There are many companies that offer free retirement calculators online. Today’s most respected financial institutions that provide retirement funds and advice include Vanguard, Charles Schwab, and Fidelity.