At all costs, major retirement planning mistakes can and should be avoided just like Caffeine. Caffeine? Yes, caffeine! Hang in there with me for a minute and you will understand what I’m talking about. When done properly, the process of retirement financial planning should greatly reduce the potential for costly mistakes during retirement.
As a veteran in the wealth management industry for more than 20 years, I have witnessed numerous financial mistakes that retirees have made. Usually however, many of the mistakes are actually made before someone retires.
Just this morning I received an email from a 19 year old who stated that he is ready to begin saving for his future. My initial reaction was to commend him for having a genuine concern about saving for retirement at the young age of 19.
My response to this young man went something like this…
Greetings! I am happy to learn that you are interested in getting off to an excellent start with your personal finances. I believe that the best place for you to begin is by establishing a Roth IRA for yourself.
With a Roth, you can contribute up to $5,500 per year with tax deferred growth potential. By the time you reach age 59 1/2, you can begin withdrawing from the funds that you have saved over the previous 40 years tax free!
Below is an example of how saving $458.33 per month ($5,500 per year) could potentially grow if you receive 8% interest, annual compounding for 40 years.
Current Principal: $5,500
Monthly Addition: $458.33
Years to Grow: 40
Interest Rate: 8%
Compound Interest: 1 time(s) per year
Future Value $1,544,285.36
Hopefully, you get big picture of what saving on a consistent basis could mean for your future, financially. Thanks for your question!