Now is the time to start saving for retirement!
“Start saving NOW for retirement!”… We hear these words a lot in today’s economy. But the fact of the matter is, if you really aren’t saving for retirement yet, now is the time to start!
The sooner you start saving for retirement, even if it’s a small contribution from each paycheck, the longer you are giving compound interest to boost your account balance. For example:
Scenario A: A 20-year old would have to contribute $245,000 over 45 years to reach $2 million in an account earning seven percent.
Scenario B: To reach the same $2 million in the same account, a 50-year old would have to contribute $1,008,000 in 15 years.
Heartland Bank wants you to get the most out of retirement saving, so that you can end up being more like Scenario A! Here are some tips to get started:
Cut Expenses
The more you save, the more contributions you can make to your retirement. Even small amounts add up over time thanks to compound interest. If you haven’t created a monthly budget, consider doing so as it will help you get a better visual of where your money is going.
Build Your Emergency Fund
You may be wondering what this has to do with funding your retirement. By establishing an emergency fund with six months’ of living expenses in it, you won’t have to dip into your retirement accounts in the event of an emergency.
Kill Your Credit Card Debt
To put it simply, the more money you have to pay in interest and principal for your credit card use, the less you can contribute to your retirement every month.
Start Making Regular Contributions
- Employer 401(k)- this money automatically comes out of each paycheck before taxes, so you won’t miss it. Employer 401(k)s are even more attractive if they match your contribution up to a certain percent.
- Fund an IRA- IRAs are a great option if you’ve maxed out your 401(k) contributions or don’t have an employer-sponsored retirement planning. Traditional IRAs allow you to make tax-free contributions, while Roth IRAs contributions are taxed and withdrawals in retirement are not.
- Don’t spend it- once you get money into a 401(k), IRA or other retirement account, don’t spend it! That is why you created an emergency fund. Early withdrawals come with stiff penalties, and you’re working against yourself by making a withdrawal.
Heartland Bank offers a number of ways to help you save for retirement, including savings accounts and IRAs. Call or come by your nearest Heartland Bank office today to learn how we can help!
Heartland Bank, Member FDIC and Equal Housing Lender