Individual Retirement Account. Yes, you need one of these whether it's a traditional IRA or a Roth IRA, you must have some system of regularly setting aside money each month. Set up an automatic payment with your bank so that a set amount - even $25 - is taken from your account each month and deposited in your IRA. You may not notice the funds each month, but they will add up over time and if you're young enough, time is your friend when it comes to retirement planning.
Employer Sponsored Retirement Plan
Maybe your employer offers a plan that you can join after a year or more with the company. If this is an option, you will be wise to join. Many employers will match your contribution or even contribute a greater matching amount than you contribute. This is free money toward your retirement - don't pass it up. Your contributions to your retirement plan could even be taken out of your paycheck before your taxes are calculated, which is another bonus.
Meet with a Financial Advisor
You don't have to be a millionaire to benefit from the advice of a financial advisor. Find someone you can trust who will show you how to develop a diversified portfolio of investments so that you will get the best returns given the time you have to invest.
Make the Best Use of Time
If you're young and just starting out in your career, you have the benefit of time. Compounding interest will be your best friend as you establish your retirement accounts and watch them grow. The older you are and the less time you have, the more you'll have to contribute.
An Employer Sponsored Plan May Not Be Enough
Just because you've set up a retirement account through your employer and are benefiting from the generous matching contributions, you'll need to make sure this account will be enough for you and your family when you're ready to retire. It is likely that you will need to maintain an IRA in addition to any employer sponsored account you or your spouse may have. You can find a retirement calculator online to help estimate your future needs.
A Non-Working Spouse Needs an IRA
If you are a woman who is not employed outside the home, you can be eligible to open your own IRA. Talk to your financial advisor about your future needs and look at your combined retirement accounts to see if this is a prudent option for you.
Other Investments
You can save for retirement in other ways by learning to invest in stocks, for example. With discount online stock purchase plans, it is easy for nearly anyone to participate in the stock market. Do your research and buy stocks in companies you can hold for the long-term and reinvest all your dividends. Many of these plans can also be set up for automatic stock purchases once you are in the program.
Retirement should be a time of leisure after a life-time of hard work and diligent efforts to earn money and support the family. Don't get caught in the trap of having to work well into your 70s because you didn't do any retirement planning. You'll sleep better at night knowing that you and your family will be comfortable and able to travel, enjoy your grandchildren and pay for healthcare expenses.
