Saving money for retirement is something many Americans are not even considering at this time. But before we know it, it will be too late if we don't consider the future right now.
So how much do you need? While this differs from person to person, the bank experts say we need at least 70% of our current income. But other experts (outside the investment industry) say you won't need near that much.
The theory behind needing less money is that eliminating child relating costs is at least %20 of your income alone. You will drop into a lower tax bracket, and with your mortgage paid off if you spend smart you could make it on about 40% of your income. You will have fewer bills by not working for sure.
But regardless of how much money you will need to save, one thing is for sure - you will need to save some money.
Here are two excellent ways to save money.
1. Place money away in your 401(k). If your employer matches 3% of your earnings after you start contributing to it that could add up quickly. And don't forget a 401(k) is tax deferred money. Many people don't even sign up for their companies 401(k) plan to save money. But if you don't sign up and your employer does match what you insert then you are literally giving up free money.
2. Open up an IRA if you are under the age of 50 and your employer does not offer a 401(k) plan. You can do this on your own and can contribute up to 4 or 5 thousand dollars annually. This money is all tax deductible, but begin to make an effort right now for your future.
One other quick note about this. If you are trying to decide whether to save for retirement or put your kid through college right now, then start saving for retirement. First, because there are tons of loans, grants and other programs available at this time to pay for college. Second, the last thing you want someday is to have to ask your kids for money because you can't support yourself.
Let's do this - start saving money for retirement.
Billy DaMore
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