En Nicaragua y Costa Rica se sintió un sismo de 7.0 grados en la escala Richter. El epicentro fue en el pacífico y se emitió alerta de Tsunami
Publicación: 2016-08-01 22:23:11 Por: sysadmin Fuente: Associated Press
In a story July 26 about how to save for retirement, The Associated Press reported erroneously the name of the independent nonprofit cited. It is The
In a story July 26 about how to save for retirement, The Associated Press reported erroneously the name of the independent nonprofit cited. It is The Pew Charitable Trusts, not the Pew Research Center.
A corrected version of the story is below:
Ask Brianna: How do I save for retirement at my first job?
Start saving for retirement at your first job so you'll have enough money to live on after you quit your last.
By BRIANNA McGURRAN
"Ask Brianna" is a Q&A column for 20-somethings, or anyone else starting out. I'm here to help you manage your money, find a job and pay off student loans — all the real-world stuff no one taught us how to do in college. Send your questions about postgrad life to email@example.com.
This week's question:
"I'm starting my first job after college, and everyone says I should start saving for retirement already. Should I? How do I do it?"
One day you will be old, and you will need money. That's hard to absorb when you're young and healthy and rightly concerned with curating a compelling Snapchat story. It's also a drag to lock up your money in a retirement account when you're just getting used to having more than $10 in the bank.
But now that you have a job and you're figuring out what to do with your paycheck, saving for retirement is possible, and — spoiler alert — critical.
A simple life expectancy calculator told me I will probably live to 86. My Italian grandmother is healthier than I am, and she's 93. We've all got to plan for life after we stop working, even if it's hard to tell exactly how long we'll be around. In your early 20s, you can save a little money now to have a lot of it later. Here's how to be financially secure when you're old, gray, and crossing the globe on luxury cruises in oversized sunglasses.
TAKE A DEEP BREATH. YOU'LL GET SOCIAL SECURITY.
Don't worry: Social Security will not run dry by the time you retire, though it isn't bringing in enough revenue to pay you 100 percent of what you're supposed to receive in retirement. The most recent Social Security Administration annual trustees' report says that after 2034, retirees will probably receive about three-quarters of the amount they're promised, which is still a nice chunk of money. Changes to Social Security policy could mean a bigger benefit or a smaller benefit later on, but you shouldn't discount it altogether.
Like many other variables in the retirement savings game, it's hard to predict how much you'll earn and be able to save on your own. But with Social Security in your back pocket, you won't be on the hook to save every penny yourself. According to the Social Security Administration, the benefit will likely replace about 40 percent of the average earner's pre-retirement income. Get a gold star in retirement preparedness and use a calculator to see a rough estimate of your monthly Social Security benefit.
GO FULL STEAM AHEAD ON YOUR 401(K)
Even though Social Security will be there, it won't cover all of your expenses in retirement. Contribute to a 401(k) at work, if one is available to you, to help make up the difference. Thanks to the beauty of compound interest, you can save $100 a month in a retirement account starting at 22 and end up richer by 65 than if you started saving $200 a month at 32.
There's often an extra incentive to sign up: Almost three-fourths of employers match at least a portion of workers' contributions to their 401(k)s, according to the Society for Human Resource Management. It's also increasingly likely your company will do the enrollment work for you, Jean Young, senior research analyst at the Vanguard Center for Retirement Research, told me. Two-thirds of millennials in retirement plans joined because their employers enrolled them automatically when they started, she wrote in a 2015 Vanguard report.
You don't even have to pick your investments. You can choose a target-date fund based on the year you plan to retire, which will reduce the risk in your investments as you age. If you cash out before you retire, though, you'll pay major fees and lose out on years of growth.
"Unless it is truly your undying passion from birth, don't take that money out of your 401(k) to buy a boat," says Timothy LaPean, a financial planner in Minneapolis, Minnesota.
NO 401(K)? FLY SOLO WITH AN IRA
A 401(k) is great if you've got one, but less than half of full-time employees ages 18 to 29 have the option to contribute to workplace retirement accounts, according to The Pew Charitable Trusts. If your company doesn't offer a 401(k), or you work part-time or freelance, you're on your own — but you're not without options.
Young folks like you often opt for a Roth IRA, a retirement account you can set up online or through an investment broker or an automated financial adviser (often called a robo-adviser). As long as you earn taxable income that's less than $132,000 annually as a single person, you can put away up to $5,500 a year and watch it grow the longer you let it sit there.
Because a Roth IRA is a long-term savings account, not a Caribbean vacation fund, you'll be rewarded for waiting it out with the ability to withdraw your money tax-free after age 59½. That makes a Roth different from a traditional 401(k): You contribute to a 401(k) before taxes are taken out of your paycheck, so you'll be taxed once you start using that money in retirement.
Set up a monthly automatic transfer from your checking account to your IRA, or sign up for your 401(k) the minute Human Resources hands you that stack of forms to fill out. Then you can gleefully check off one more item on the Adult Responsibility List.
This column was provided to The Associated Press by the personal finance website NerdWallet.
Brianna McGurran is a staff writer at NerdWallet. Email: firstname.lastname@example.org. Twitter: @briannamcscribe.
Social Security calculator
Don't wait for a 401(k) to start saving for retirement
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