Retirement planning is a major part of the lives of most Americans, and for good reason: without proper saving and planning, going into retirement can be difficult, if not impossible. It takes foresight and good decisions in order to properly prepare for a long and enjoyable retirement. The financial knowledge required to set yourself up well for retirement is not that complicated, but it is something that many veterans might not know, simply because it is rare for schools to teach it, and people who do not have a background in finance or a similar field might never have come across it. In Detroit MI, failing to plan for retirement is planning to fail to retire.
The first thing to understand is that saving for retirement is a long-term proposition that depends on financial discipline. You need to be able to put away at least ten percent of your income into some form of savings. That isn’t easy, but there are ways to make it less tempting to dip into savings. For example, one idea is to ask your bank to set up an automatic transaction that takes some of your paycheck and puts it in a separate account every time you get paid. That will ensure that you can save money without even needing to think about it, and you will be less tempted to spend the money you save.
Investing and Saving
The next thing to consider is how to save. Many people default to placing money in a savings account, but this is usually a mistake. Savings accounts currently pay almost nothing in interest- the money will be safe, but it cannot grow. It is better to invest the money so that it can grow over time. There are a few ways to do this. If your workplace offers matching contributions to a 401(k) plan, then take advantage of that. A 401(k) plan is an investment account where you do not need to pay income tax on money that goes into the account. This lets it grow faster. Usually, you do not need to make decisions about specific investments to make- the finance company that manages the plan will offer you one of several broad choices in the beginning, instead of asking you to choose individual stocks and bonds.
Another option is the Individual Retirement Account, or IRA. IRAs can come in one of two forms- regular or Roth. Regular IRAs have the same tax status as 401(k) plans. Roth IRAs work slightly differently- you pay income tax on money that you put into the plan, but not on money that you withdraw from the plan. There are some rules in place that prevent you from withdrawing money from 401(k) plans or IRAs until you are near the age of retirement.
Retirement planning in Detroit MI is a combination of knowing where to put your money and having the discipline to commit to saving it. With the knowledge in this article, you can save with confidence.
If you are a veteran, or you have a loved one who is, and you’re looking for coverage and financial support, USA War Vet is here for you. Call us at 1-800-850-5504 or visit us at www.usawarvet.org to learn more.