I’m 34 and I’m still getting my BA, I don’t have a career yet I just work at a coffee shop right now. A friend of mine who is a few years older sometimes tells me I should start saving for retirement. How? Why? I don’t make much money so I wouldn’t be able to put much away. Is it really something I should worry about right now?
In: Economics
A lot of people rely on 401(k) (employer provided retirement plan) or Individual Retirement Account (IRA) to save for retirement. Anyone can open an IRA at any time, it’s worth looking into. Even if you only put a little bit away each month it’ll grow faster than it would if it were in a savings or checking account.
Better to start looking into things now rather than later. Every year that passes, your money loses some of that buying power and it takes *more* of an investment to make up for what someone else already made saving *less* money (for instance, a person who put away just $500 at age 18 might have grown that to $5,000 by the time they are 40. Not a lot, but if you’re 34 and put away $500 it might only grow to $1,000. This is a really basic example that’s not rooted on hard factual numbers, just trying to illustrate the point).
edit: The advantage to either of those retirement plans is that they are tax deferred. With one type your money is dropped in after it’s taxed and then it can grow and grow and you don’t pay taxes on whatever you withdraw. With the other type the money is *not* taxed until you actually start withdrawing it.
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