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Just recently, my dad revealed to me, my parents’ first step in financial planning for their future and r that they decided on when they first got married. He told me that they had the mentality of…”We need to save as if Social Security won’t be around when we retire.” Sure, you probably always hear someone saying “they’ve been saying that social security is going to vanish, for years. But it’s still around.” It is, until it isn’t. My parents started saving for their retirement right away, and even though they are not at retirement age at the time of this being written, I know that they will be enjoying a nice retirement in the next few years to come.
A few decades ago the idea of receiving your Social Security checks once you hit 65 was anticipated, and in some cases, dependent upon. After working 40 plus hours a week for several decades, all the while, watching the Government take chunks out of your paycheck week in and week out.
Now it is in the forecast that the Social Security and Medicare funding well is close to running dry. It’s predicted that the Social Security funding will be all but gone by the year 2023. Meaning us Millennials are going to witness the extinction of Social Security funding before we are even close to retirement.
Update June 2024:
Social security is still around. Well, they’re still taking it out of my paycheck every other week that is. And my grandmother is still receiving her monthly social security checks. So I guess, there’s still a chance for my generation to have some funds to look forward to. Let’s see if I have another update to add here in a few decades.
There are multiple effective methods of stashing money away for your future time of being retired. From a retirement account provided by your employer, your own individual account, or even different apps that help you to accumulate money over time. All of which are options that help you to use your money to make more money while it is in the account. Sure, you can open a regular savings account and save every penny possibly. But opening an account that builds money on top of your money that you add it so much more advantageous. Let’s dive little deeper into these different options.
Save for Retirement with an App
Some of you may have already heard of it or are using it. I’ve had it for about two months now and it’s already stashed away nearly $50 for me. Not only is this my money set aside for me, but it’s also been invested and earned me some dividends as well.I can pull the money I have at any time I want, but I’ve decided to let it stay out and watch it grow.
To learn more about Acorns, check out this article by Pennyhoarder. I am not an affiliate with Acorns, just a big fan and would like to recommend it to anyone who’s interesting in investing in their future the simplest way possible.
Another great way to start building up that retirement account are with a retirement-focused account like a 401k or an IRA. These types of accounts can be an awesome way to set aside money for retirement each paycheck without even lifting a finger. OR you can choose when to contribute money, on your own terms.
Just make sure you know all the details of the account before setting it up.
What’s the Difference Between an IRA and a 401(k) Retiremnet Account?
To put it simply, a 401(k) is an account set up by employers that you contribute to as well as the employer. Typically employer contributions are made in percentage matches. Investments will also be made on your behalf, helping you to grow your money even faster.
On the other hand, an IRA is your own, individual retirement account, not affiliated with your employer. With this, you are able to choose where you want your money to be invested. You can choose how much you want to add to this account, and when. Since an IRA has nothing to do with your employer it can follow you where ever you live or work.
Either one can be incredibly helpful when planning for a comfortable retirement in the future. When it comes to picking the one that would be best for you, quit really comes down to what suits you best. Learn as much as you can about any retirement plans your employer may have to offer, as well as any that your bank may have as well.
You could always set up an appointment at your bank with an investment specialist, where they could go over the options with you and help you to decipher options. Doing this in your twenties rather than waiting, telling your self you’ll take care of it later, is one of the best things you could do for your future self.
For some additional insight into planning for retirement in your twenties, check out the websites I’ve recommended below. Doing some research on your own before going to talk with a professional will give you a leg up when they start throwing big, foreign phrases out there.
Penny Hoarder is a really great website full of TONS of awesome insight about money, among many other topics. Check out this awesome article on their website, to learn even more about planning for your retirement the right way. Another incredibly insightful website that can teach you about retirement is making sense of cents. Michelle really knows her stuff when it comes to personal finances and preparing for a comfortable financial future.
I wish you the best of luck in your retirement savings, and hope that this article shed at least little light on some of your options that are out there currently! Do you put your money away a different way than I talked about above for retirement? Tell me about it in the comments!
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