You’re young. You’re only on your second job but you’re doing well. You just moved into a great apartment downtown (ok, it’s with three other roommates). You finally have some spending money to spare.
What to do? Buy that new car? Upgrade your high-tech stuff? Did anyone say, Bitcoin? What if we said, “how about opening an IRA?” Sounds exciting and cutting-edge, huh? “I’m young,” you say, “why should I worry about retirement now?”
But what if we told you, for argument’s sake, that investing just $400 a month in an IRA starting at age 25 will give you a retirement nest egg of $1.37 million at age 70 (assuming a 7% average annual return). If you begin at age 30, that will yield you $958,000 in retirement savings.
Wow, how does that happen? Through the magic of compounded interest. What’s that you ask? In simplest terms, it’s the interest on your interest and it’s the key to growing your money.… a lot over the years.
Of course, that was just one example. If $400 is too much, consider $100 or $200 a month, then start increasing the contributions as you earn more. It’s not hard to budget for retirement. Ordering in one less dinner meal per week ($10-$15) could save almost $800 per year, and bringing lunch to work one day a week ($5-$10) could save $260 to $520 a year. How hard is that?
And one more thing. Don’t expect Social Security to provide for your retirement years. Unless you want to severely cut back on your lifestyle, those benefits, while nice to have, just won’t be enough for most of you.
Firstrade makes it easy to open a commission free traditional or Roth IRA. Either way, don’t delay.
Click to get started.