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“Retirement Concerns” #MoneyMondays

Question: “When will I be able to retire?”

Answer: That all depends on you! When it comes to the question of retirement, the most important thing to remember is that retirement is less about your age and more about your financial situation.

No one should want to wait around for social security or, worse, become a burden to their children. Your retirement years should be more than that.

Once you’re out of consumer debt, we suggest that you begin investing at least 15% of your gross salary into tax-advantaged plans such as: a 401(k), Roth IRA, etc. This allows you to take advantage of compound interest over time.

Most people underestimate being out of debt when it comes to retirement, but it really does make a huge difference.

For instance, I know a family who carried a lot of low-interest debt. During that time, they were contributing to their retirement plans very aggressively. They did this because, on paper, the interest they were earning was more than the interest they were paying.

I won’t go into details, but tragedy struck this family and they ended up needing to cash out their retirement portfolio just to stay afloat. When they pulled from their retirement, they were instantly penalized for the early withdrawal.

Not only that, but the withdrawal triggered a large tax bill as well. Most importantly, they lost the opportunity to have that money gain additional interest in the future.

Talk about a tough situation, right? That’s why we suggest creating a budget, getting out of consumer debt first, and building an emergency fund of 3-6 months of expenses before you start investing for retirement.

Is basic math important when dealing with money? Absolutely! However, what basic math doesn’t always account for is the risk we take when we carry debt around. Those risks can really hurt your retirement dreams like in the example above.

Finally, there are numerous tools online to help you determine just how much you actually need to be setting aside for retirement. My personal favorite is the R:IQ tool by Chris Hogan. You can find that tool by clicking here.

To get a personalized game-plan to help you get on track for your retirement goals, book a session with a Financial Trainer at the link below.

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