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Once you reach the age of 65, your bank account gets a huge deposit as a reward for being of retirement age, right? Wouldn’t that be nice! The time to start planning for your retirement is now, when you can’t even picture it in your future.

Otherwise, you’ll wait so long that you won’t be able to retire on time or you’ll end up retiring without nearly enough money to support yourself. Luckily, you have a few options when it comes to stocking away money for your retirement.

Your Employer

If you’re employed, chances are that your employer has some time of retirement plan option. You know those e-mails you delete every single month from the company that holds your employer’s 401K plans? Read them! If you’re lucky enough to have a job that provides a 401K, use it. You only have to contribute a small amount to start and most employers will match what you contribute, which means you get more money just for putting in some of your own money. Sign up to have a certain percentage of your paycheck automatically go into your 401K – you won’t even miss it, since the transfer will be made before you get your check. Plus, your taxes will be lower during tax season.


You’ve been great about keeping up with your savings plan, but all of that money has just been sitting there untouched for years. Why not invest a small portion of it? Since you can clearly live without your savings most of the time, taking a risk that could pay out big is absolutely worth it. Plus, you don’t have to put all of your investment into risky areas. You can take whatever you want to invest and split it between safe and risky investments. Not sure how to do that? Contact your bank for guidance.

Most 401K and employer investment plans have the same option. The companies that control the investments have customer service representatives who can guide you when it comes to making investment choices.

Individual Retirement Account (IRA)

On top of a 401K – or sometimes instead of one – people choose to put some money into an IRA. People who are under the age of 50 can contribute as much as $5,000 every year to their IRA. Once you pass the age of 50, you’ll be able to put even more away in the account. There won’t be a penalty if you only have a very small amount to contribute in the beginning and most IRAs have tax advantages, too. There are two main types of IRAs (traditional and Roth) and inflation, taxes and withdrawals vary depending on which type of IRA you choose.

Tips and Advice

Whatever you do, don’t stop saving, or worse, cash out your retirement accounts. At times, it’ll be difficult to do without that extra money, but if you can learn to live on less, you’ll be thankful when you reach retirement age and can actually retire. If you have to cut back on how much you contribute, that’s fine. Experts say that even contributing very small amounts will eventually add up to be beneficial.

If you need cash quickly and think that withdrawing the funds from your retirement account is an option, think again. You’ll end up losing a lot of the money and you’ll also be taxed heavily for it. Plus, some accounts require you to pay a fee just for withdrawing early. Your best bet is to base your budget around what you earn after your retirement contributions have been made. Act as if that money doesn’t even exist. For the time being, it’s not an option.

Kelly Dugan is a professional blogger that enjoys providing consumers with personal finance advice. She writes for Patrick Accounting, a leading accounting firm in Memphis TN.

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