Investing For Retirement: The Ultimate Contingency Plan

Retirement Financial Planning

Investing for retirement when you are young, and retirement is so far away, can be difficult to prioritize. Yet the earlier you begin, the longer your money has to grow, resulting in the potential to meet financial goals with the lowest monthly contributions.

Here is an example of potential growth through regular monthly contributions:

investing for retirement

Numbers assumes 8% annual growth compounded monthly and are for purposes of an example, not a specific investment choice.

“This is a hypothetical example. No specific investments were used in this example. Actual results will vary. Past performance is not a guarantee of future results. Investments will incur fees & charges. “

Based on these calculations, even small investments, started early and regularly, can result in healthy account balances when you are ready to retire.

What Happens When Life Happens?

The biggest challenge and obstacle to investing is that life is not as smooth as these calculations. Today you do not generally work for the same company for 30 years and then retire. Annual raises cannot be taken for granted. Pensions are nearly obsolete and even reliance on social security is questionable.

These realities create uncertainties during your working years as well as retirement years. With potential gaps in employment, and periods of underemployment, saving for life’s unknown challenges is now more important than ever.

The principles of investing are about paying yourself first. As safety nets diminish, this principle is more important than ever. Learning strategies designed to create financial security for the long term, will provide both comfort and confidence, as life happens.

These strategies include living within your means and investing in your future. This will help you to be self-reliant and prepared for the ups and downs life throws your way.

Types of Retirement Plans and More

Retirement financial planning has some very distinct advantages, most of them with regard to the tax advantages found in retirement accounts. Placing money in these accounts provides additional compounding, allowing your money to grow faster, due to the tax savings. There are many types of retirement plans to consider.  The most common retirement accounts are 401K’s and IRAs. 401K’s with matching company funds add the extra benefit of the employer contributing to your retirement. IRA contributions can generally be made in addition to 401Ks, allowing you to set aside even more money for retirement. The downside of retirement accounts is that the money is not available until you are 59 ½, without paying taxes and penalties, with a few exceptions.

To mitigate the lack of access to retirement accounts, investors also seek to fund accounts that are not tied to retirement. This can be in the form of college accounts and HSA (Healthcare Savings) accounts, which can offer tax benefits. Maintaining a stand alone brokerage account can also provide funds needed for financial goals or unexpected expenses, which can be accessed at any time.

Adding additional layers of investments will provide for contingencies and the potential for greater security for your family.

Investing Today

Given the high levels of uncertainty, there is a greater sense of self-reliance in most aspects of your life. The DIY trend extends to nearly every industry, giving you greater control. The Internet and increased access to information has greatly benefited investors as you can better research and study investment options.

As a result, the team at Sherman Wealth Management, serves in a consulting role, allowing us to put your financial needs first and foremost. This extends to helping clients with financial management, pursuing investment goals, and helping you build a strong financial future.

As you build a roadmap toward a secure future, we will be your guide. Taking your dreams and financial goals and helping you create strategies to pursue those goals. Starting today is an important part of the process of turning dreams and goals into a reality.

To get started now download our New Client Questionnaire

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