Investing for a Lifetime
When it comes to investing, history tells us that nothing beats time in the market. That’s why making regular contributions to investment and retirement accounts throughout your working years — and not just toward the end of your career — can pay big dividends. Having a nest egg consistently growing in every decade of life can help reduce financial anxiety and make dreams like moving, changing jobs, starting a family or retiring early a reality. Here are tips that can help — whether you’re a recent graduate or trying to land the plane for retirement.
In Your 20s
Retirement looks a pretty long way off from here. You may have student loans, need a car for work and be stretching your budget to afford a better apartment, but putting just $200 a month into a tax-deferred account starting at age 25 could net you nearly $700,000 by age 65 (assuming an 8% return). Some ways to eke out extra money to invest: Negotiate the best deal you can on any student loan debt, buy a solid (if unexciting) used car and consider roommates to split the rent.
In Your 30s
With a mortgage, family expenses and career pressures, you have more financial balls to juggle just when you have the least amount of time. Be systematic. Create a realistic budget that accounts for all of your expenses — from your mortgage down to your daily venti latte — and carve out money to invest on a regular basis. The easiest money to save is the money you never see, so sign up for your company’s 401(k) and have contributions automatically deducted from each paycheck. Put the mortgage and other “musts” on autopay so late payments don’t ding your credit.
In Your 40s
You may have more income and assets now — and probably more liabilities too. Review the status of your retirement savings and other investments with a financial professional, along with your insurance coverage, at least yearly. Your taxes may also be higher now, so take a closer look at your tax management strategy. While you’re at it, discuss whether it makes sense to consider supplementing your 401(k) — if you’re maxing out your contributions — by opening a traditional or Roth IRA.
In Your 50s
Consider where you want to retire and what lifestyle you want to have. Do you want to keep working part time, travel or move closer to your children? Your retirement strategy needs to account for your goals — and those goals are more short-term than long-term now. If you’re age 50 or over, the IRS allows catch-up contributions to your 401(k) that go above the current annual $22,500 limit. Talk to a financial professional to make sure your investments are on track to meet your needs and determine whether your allocations reflect an appropriate level of risk for the time you have left until retirement.
In Your 60s
For many people, retirement is imminent at this stage. One big decision is when to start taking Social Security payments. You can begin as early as age 62, but delaying until your full retirement age (which depends on your birth year) will result in larger monthly payments. Talk to a financial professional and discuss your health, retirement dreams and immediate financial needs. Together, you can map out your retirement income stream to help maximize enjoyment of your golden years.
Don’t put off setting your goals and developing a sound financial plan for the future — because it’ll be here before you know it.
Source
https://www.nerdwallet.com/calculator/investment-calculator