Now in my fifties, I am thankful that I got serious about retirement planning in my thirties. The catalyst was winning a substantial prize in a sweepstakes, only to see a huge chunk taken in taxes because I was not maxing out my retirement plan.
I knew better. More than a decade before, I had IRAs explained to me in excruciating detail in a teller training class. Compound interest was explained then too and went right over my head. I decided at age 18 that a retirement plan sounded like an excellent idea, and I would start mine at age 40.
I did cave in and started a very small IRA at age 25 with exactly $250.00, the minimum, in Neuberger and Berman Partner's fund. https://www.nb.com/funds/. It sat dormant until my wake -up call a few years later. It was fortunate I arose from my beauty nap. An early start means that most of the money in the account comes from compounded earnings. Start late and you might not catch up, no matter how much money you shovel in later.
Never fear that you will miss the dough. It's better to chance having to withdraw funds from a retirement account than to have never saved at all. Most plans have loan provisions. Money can also be removed for up to 60 days once a year without penalty so long as the money goes back into another retirement plan. This is called a roll-over. Lastly, one can take a small portion of the funds and pay the taxes and penalties. It's still better than never saving at all.
You can have both a retirement plan at work and your own IRA. Since the retirement plan contributions come out first, fully funding an employer's plan may make you eligible for a deductible IRA where you might otherwise have too high an income to qualify. The most accurate information is available at: http://www.irs.gov/publications/p17/index.html . Retirement Accounts for Dummies is another excellent resource. http://www.dummies.com/how-to/personal-finance/investing/retirement-accounts.html.
Start an IRA with a no-load mutual fund if you have no retirement plan at work or want to sock away more cash Forbes Magazine http://www.forbes.com/mutual-funds/ and The Morning Star Reports http://members.morningstar.com/mk/templates/mkvisitor1.html?referid=AF1000 are especially good at pointing out suitable possibilities. How aggressive you get with your money depends on your age. Younger people can take more chances because they have time to recover from losses.
I've had very good luck with funds by TIAA-Cref, which was started to fund pension plans for college professors over a century ago. https://www.tiaa-cref.org/public/index.html. Other well-regarded companies include T. Rowe Price https://individual.troweprice.com/public/Retail, and Vanguard Funds https://investor.vanguard.com/corporate-portal . All of these funds have customer service representatives who can guide you through the process of starting an IRA or moving funds from an old retirement account.
Buy directly from the fund. Avoid letters after the name of your fund. All those "As, and B's and C's, represent sales commissions, also known as "loads". Beware of 12B-1 fees too http://www.investopedia.com/terms/1/12b-1fees.asp. Look for a fund with no loads, low management fees and a small or non-existent 12B-1 fee. Seek one with a steady performance over a ten-year period consistent with your goals. Funds that are terrific this year may never be any good in any other year. If it hasn't turned in good results consistently, stay away. Funds suitable for a retirement account include "Long-term Growth," "Balanced," "Growth and Income" or "Targeted Funds." A customer service rep can suggest what types might be best for you.
Establish automatic deductions from your bank account or paycheck into the fund. Funds often reduce or waive custodial fees or minimum balance requirements in exchange for the guaranteed stream of cash. Additionally, low-income savers may be entitled to a small tax credit for contributing to an IRA. Consult IRS publication 17 or Taxes for Dummies for the latest. http://books.google.com/books/about/Taxes_for_Dummies.html?id=hdVg0sJkgC4C.
Start early, save regularly and choose wisely for best success.
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