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Young Adult's Guide to Retirement

Updated on August 15, 2014
Start planning now so you can make the most of your retirement!
Start planning now so you can make the most of your retirement!

Retirement Planning

There are many schools of thought out there about the best and smartest was on planning for retirement that you will run across, and to make things clear from the beginning, this hub is not to be taken as professional financial advice. This hub and the information provided within is simply a guide that will highlight information and resources on the different typed of products that are out there for retirement. And one of my biggest hopes is that this hub will aid you in your search for more information and will help you better understand these types of products available and in turn will allow for you to make smarter, more informed decisions as you plan for your financial future.

So let's get started! When is it best to start planning for your retirement? As soon as possible! That is the best single piece of advice that can be given about retirement, PLAN AHEAD! Generations are different when it comes to retirement. Past generations did not plan for retirement or have had their pensions decimated with the economic downturns. This is not because past generations were less knowledgeable than other generation, it is due in part to the struggles they endured to eras such as the great depression which caused a very deep distrust in banks. But one thing that has changed is that younger generations are much more aware of the possibility of these eras of financial hardship and are much more eager to start planning for financial future much sooner.

Have you started planning for retirement?

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Start Here!

It can be quite daunting when trying to understand all the types of financial products out there for retirement but to help streamline things a little below is a basic table with some of the more common types of financial products available. At this stage do not worry over what the differences are just know that there are several types of accounts and several types of things that can be bought as investments known in broad terms as securities. We will get more in depth with all of this a little later!

Examples of Retirement Products and Terms

Accounts
Securities
Terms
401(k)
Stocks
Tax Deferred
IRAs
Bonds
Tax Exempt
State/Federal Retirement
Mutual Funds
Rollover
 
ETFs
Roth

Planning for retirement can be confusing! But it shouldn't be!

Planning for your retirement can be overwhelming. Finding a financial advisor can ease the stress!
Planning for your retirement can be overwhelming. Finding a financial advisor can ease the stress! | Source

What can you do now to help in retirement?

Many people worry about how much they are saving each pay check, month, or year for retirement but one of the best things that you can do now to help in retirement is to live within your means. What does it mean to live within your means? Put simply, it is to live without spending more than you make. If you are able to live within your means it will making saving easier and become habit. And making saving a habit does not necessarily mean just for retirement. It could be to help build an emergency fund or simply to save for the purchase of a higher priced item such as a new appliance or furniture.

What is a 401(k)?

A 401(k) is a retirement savings plan offered through employers that can either be funded through pre-tax or post -tax dollars. In some cases the amount contributed to the 401(k) plan is matched by the employer.

As for any investment product make sure to look at the fees, commissions, or anyother costs so that you are able to put the most money working for you.

Benefits:

  • Options to fund pre and post tax money.
  • Employer matching
  • Self managing and professional management.


Individual Retirement Accounts [IRA]

Individual Retirement Accounts, also called IRAs, are a retirement product that allows you to contribute either with pre-tax or post-tax dollars.

IRAs funded with pre-tax dollars are called Traditional IRAs.

IRAs funded with post-tax dollars are called Roth IRAs.

Alot of people as which one is best, Traditional or Roth? That is a hard question to answer and depends on the financial situtation of each individual. Where as opening a Roth IRA may be the best avenue for you does not mean that opening one for myself would be the best option.


Benefits:

  • Pre and post tax funding options
  • Many options of institutions to chose from

Investment Products

Stocks, Bonds, Mutual Funds, and ETFs are all important to understand as they are involved in many aspects of planning for retirement.

Understanding these investment products can help those who want to manage their money themselves or for those who have a financial professional managing their money for them.

It should be obvious that knowing, understanding, and learning as much as possible about these securities would be of high importance to those who manage their own retirement accounts. But it should be a priority as well for those that have someone else managing their retirement finances becuase it can help you become better informed to make decisions such as chosing the best company to go with, in choosing a financial advisor that is inline with your goals and values, or what the fees associated with your accounts.

Source

State and Federal Retirement Plans

If you are an employee of a local, state, or federal entity then it is important to fully understand the retirement system and of all the options that are offered so you can make your money work the best for you.

State Retirement Plans

  • There can be different types of state retirements for example in the South Carolina Retirment System there is:
    • South Carolina Retirement System (SCRS)
    • State Optional Retirement Program (State ORP)
    • Police Officers Retirement System (PORS)
    • General Assembly Retirement System (GARS)
    • Judges and Solicitors Retirement System (JSRS)
    • National Guard Retirement System (NGRS)

Federal Retirement Plans

Personal Savings and Debt

When planning for retirement it is important to make sure you are preparing yourself and your family financially for the future. But it is as equally as important that you plan for current financial situation so that you have some savings built up and that you have control over your debt.

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