Save today and plan for the option to stop working someday.
Retirement may seem at a distant future when you first start working, but it’ll be here before you know it.
Take advantage of your earning power now and save for a comfortable retirement later. The sooner you make a plan and start saving, the sooner you feel empowered to take on your financial future.
Saving for retirement is important because it is one of the most expensive goals you will save for and ensures financial security, independence and stability in the future when you are no longer able to work.
There are three common ways to pay for retirement and sometimes referred as the three-legged stool. They are Social Security, pensions, and personal savings and investments.
How much you will need at retirement will depend on how much you will spend during retirement and will vary for everyone. A general rule of thumb is to save or invest 10% – 15% of your gross income for the future.
A retirement account is a specific type of tax-advantaged account that allows your money to grow on a tax-deferred basis until retirement.
There are several different types of retirement accounts. The two common ones are employer sponsored retirement plans, such as the Thrift Savings Plan, 401(k), and 403(b) and individual retirement plans such as Individual retirement accounts (IRAs), self-employed plans (SEP) and SIMPLE IRAs.
A traditional IRA allows contributions made with pre-tax money, meaning they reduce your tax bill now, but withdrawals later are taxable.
A Roth IRA allows contributions made with after-tax money, meaning they do not reduce your tax bill now, but withdrawals later can be tax-free as long as a few rules are followed.
The military offers retirement benefits, including the Thrift Savings Plan (TSP) and a pension if you serve long enough. The benefits you may receive depend on how long you serve and how your investments perform.