So far, we’ve discussed three best practices to: Ensure we’re spending our money wisely, eliminate interest-bearing debt as quickly as possible and increase discretionary income:
5-Step Plan to Financial Success: Part 1
5-Step Plan to Financial Success: Part 2
5-Step Plan to Financial Success: Part 3
Today, we’ll cover one of the easiest ways to make your money work for you over the long haul in preparation for retirement.
As long as you’re not barely making ends meet, two of the simplest and most helpful options you have are:
1. Invest in your company’s 401k or equivalent program
2. Set aside a portion of your post-tax money in a Roth IRA
Both options are designed to allow your money to grow without you having to assume much effort. With a company 401k program, all or a portion of your financial contribution is matched by your company. That’s free money each month!
My suggestion is to enter as much into this program as the company will match. The beauty is that you never really miss the money, because it’s taken out prior to receiving a paycheck. By faithfully having the company enter and match at least part of your money each pay period, the amount can quickly add to a sizable sum for future financial support.
And, if you change jobs, you can take the money with you to invest in that company’s 401k plan!
If you can also afford a Roth IRA, then I strong urge you to do so. I suggest a Roth IRA, because for those of us who can’t set aside a large sum of money up front, this option allows you to add money as you go – it can even be debited from your bank account automatically. For those younger than 60, you can enter as much as $5500 per year. You also have options regarding your investment strategy, so speak to a well-trusted investment planner. The unwritten rule is the younger you are, the more aggressive you want to be. Again, the choice is yours.
Disclaimer: Remember, these are only two of numerous investment options for those who can afford to set aside income each month for their retirement and it’s always best to consult with a financial planner or company representative before beginning any investment plan.
Make today better than yesterday, but not as great as tomorrow!
Chris Errington is a husband, dad, writer, seeker of truth and fervent believer in the power of utilizing best practices to live a more balanced and enjoyable life. When I’m not coaching Little League baseball, rooting for the Steelers and West Virginia University or desperately attempting to grow grass in the front/back yards, I’m working my plan to live my ultimate goal – Writing remotely from the deck of a 32-foot sloop while sailing throughout the Caribbean. Getting my wife to agree is another matter entirely.
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