Retirement Account

A retirement account is one of the most important funds that you can open at any stage of your life, whether you are just starting your professional career or are only a few years away from retiring. While it is true that the cumulative financial benefits are greater the younger you are when you start to invest, neglecting to open a retirement account in your 20s is no reason to neglect investing as you get older. Thanks to compound interest, every year that you put money aside for your future will pay enormous dividends and will serve as a great retirement gift to yourself down the road. Seeking the advice of a professional financial advisor can help you determine the best retirement strategy for you.

Basic Retirement Accounts

No matter what your age is, some financial accounts should be a staple of your portfolio. A 401k account or an Individual Retirement Account (IRA) offer great benefits to everyone, but particularly to investors over the age of 50. At this age you can contribute "catch up funds" beyond the regular legal maximum. Both a 401k retirement account and an IRA will allow you to have a portion of your paycheck diverted to your retirement each month so you don't even need to think about remembering to contribute. Moreover, since you don't see these funds in your bank account, it's easier to not to miss your contribution. Some employers match your contributions to your 401k fund up to 100 percent, but this is not a requirement. While 401k is typically offered through an employer, self-employed workers and small business owners have the option of a Solo 401k, while government and nonprofit workers can enroll in a 403b account. One advantage of having a 401k account or variant is that you can also enroll in an IRA without penalty.

One of the most important actions you can take before you even open a retirement account is paying off your high interest debt. A personal financial consultant can help you prioritize your debt to help you pay your obligations with minimum interest. Taking care of credit cards and student loans can give you a clean financial slate so you can fully focus on retirement. Once you are debt free, you can start building your first savings account. Once you have saved a few thousand dollars in a high-interest retirement account, you can start thinking about varying your portfolio. A certified financial advisor can help you determine which investments are right for you.

Investment Plans for your 20s

Investing your 20s and into your 30s can include more high-risk securities than it can in your 40s and 50s. This is because you can wait out the natural ebbs and flows in the market more easily. Your portfolio might include common and preferred stock, mutual funds, foreign investments and bonds at this point. Your 20s and 30s are also a good time to buy a home, a solid but non-liquid investment that you will likely hold onto for decades. A financial advisor can help you determine criteria for a good investment home that can become a part of your overall nest egg once you retire. The effects of compound interest can add hundreds of thousands of dollars to your savings when you retire if you start putting money away in your 20s, so making a conscious effort to think about your future will pay enormous dividends.

Savings Plans for your 40s

It is never too late to start planning for retirement. If you are just starting your retirement account, a certified financial consultant can show you all the ways you can make your dollars stretch so you can retire with close to the same lifestyle you have now. You might have to work a few years beyond your expected retirement age or take on a part-time job, but working with a professional can help you reach a point where you feel comfortable in retiring. In your 40s and 50s it might be tempting to make up for lost time by choosing a high-risk, high-yield retirement account, but this strategy could be devastating if markets go the wrong way at the wrong time. Choosing steady, reliable accounts will ensure that your money is there for you when you need it. A financial advisor will likely recommend a varied account with an emphasis on safe accounts like bonds or Treasury bills.

Building a solid retirement account can be difficult if you aren't sure where to begin or what kinds of accounts to research. Seeking the help of a personal financial advisor can give you the resources you need to make sound decisions through every stage of your life, whether you are 25 or 55. An advisor can show you all your full range of options depending on your income, age and desired lifestyle to help you reach your long-term goals.

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