Don’t Rely On Social Security: Retire Comfortably At Age 65 By Making Wise Money Investment Choices Today
There are many goals Americans have in their lives. However, the goal that needs to be at the top of the list is retirement investing. And, if it’s not at the top of the list… it needs to be! Social Security isn’t liable to be around much more… at least not in the sense you see it now. Think of it this way. If you’re 20 years of age, you’ll face one of two aspects:
1 – The unavailability of Social Security when you’re ready to quit work for good.
2 – An age increase that most people won’t attain.
You might be wondering why Social Security is changing. To understand this change, you need to understand why Social Security is headed for some real trouble.
Why Social Security Is Headed In A Negative Direction
When Social Security first started, the average American life expectancy was very early in “life”. Thus, people who actually reached retirement age often died shortly upon getting their first check. As people began to live longer and the number of retired people grew, the Social Security’s “pay as you go” system had a rapid influx of retirees that it needed to pay and provide for.
And, it’s not going to be long before the entire system gets hit by the huge numbers of baby boomers asking for the checks. After all, the number of baby boomers is going to outnumber those in the working population. Do you think this sounds like trouble for the system? If so, then you’re completely 100 percent right!
What Can You Do To Protect Yourself When It Comes To Your Retirement
With that thought in your mind, what can you do to protect yourself… if anything? Actually, there are many things you can do but you need to get started on it now. Not tomorrow. Not two weeks from now but today! However, just remember that what you’re looking to do is ensure that you have a good amount of resources that are making you money so that you can live during retirement without having to rely on that “supposed” Social Security system.
Remember that the outlook for Social Security is rather bleak for teenagers and young adults. Yet, retirement investing is much easier to do when you’re younger so that bleak picture doesn’t look so bad anymore.
The keyword is “time”. After all, when you’re younger, you have additional time to save annual contributions to your retirement plan. When you start saving and investing young, you have more time than someone who is 10, 20 or 30 years older than you. This additional time allows you to get involved in some investment gains so that they’ll work their magic for your money.
A 20-year old is able to save $2,000 each year until he/she turns 65 years old, earning a four percent return. By age 65, they’d have $251,000. $90,000 of that money would come from the investments the 20 year old made but the other more than $161,000 would have been generated from the interest. A 50 year old saving $2,000 a year would have just $41,000 saved up by the time they hit 50 years of age. $30,000 of that money came from their pockets and they only earned just over $11,000 in interest. This additional time to save money is a significant advantage for one’s personal savings especially since Social Security sounds rather bleak.
You also have another benefit to early retirement investing and that’s investing in things that are more unpredictable. Of course, the closer to your goal that you are, the less risk you need to make with that investment. However, the more risk you do take, the more returns you’ll get from it… potentially! Folks who are close to their retirement age will often choose investments that are either fixed or give low returns.
The younger generation has the chance to invest more of their dollars on the stock market and they should, as it works in conjunction with inflation. If inflation is running high, it erodes any buying power for money. People who have a three percent return on the dollar lose their buying power if inflation sits at four percent.
The Types Of Investments For Retirement
There are several ways to begin investing in your future. First, you can go with the company-sponsored plans from your work including:
– 401(k) – which is considered most popular
– Traditional pension plans
– Thrift accounts
– SIMPLE plans
Teachers and folks who work for a non-profit organization also have the option for the 403(b) plans. Teachers and persons working for the government also have the option to use the 457(b) for their retirement. The letters might be a bit confusing but they allow you to place money aside the government will typically tax into an account that’s tax-deferred.
You also have the option of doing retirement investing using Roth and traditional IRAs, annuities and mutual funds. Keep in mind that mutual funds don’t offer any tax savings but can be accessed if you need emergency cash. The Roth won’t save you in tax dollars either but you don’t have to pay taxes on the growth money. Annuities did give you tax relief on its growth until you take the funds out. And, traditional IRAS counterbalance the taxable dollars for the year you invest, allowing the funds that grow to be tax-deferred