Start now on retirement planning
by Douglas E. Welch
January 21, 2000
© 2000, Douglas E. Welch
As we all know, the days of lifetime employment and a comfortable
retirement plan are long gone. Whether your career consists of long term employment at one company,
a series of short-term projects as a consultant or full-time freelancing,
you need to take a long hard look at your retirement plan today.
Investing in your retirement today doesn't mean you will suddenly
stop working at a certain age as people did in the past. Today
retirement is the freedom to do whatever you wish when you get
older. If you want to continue working, you can. Many people do.
When you invest in your retirement you will also have the funds
to work less, take vacations or just spend time doing what you
like best. It might be better to think of this money more as "freedom
funds" than a retirement plan.
401K Plans
While it is never too late to start planning for your retirement
you should start as soon as you get your first job. If your company
has a 401K plan, join it as soon as you are eligible. Not only
can you set aside part of your own salary, but the company will
often match a portion of your salary. While it might not be money
that you can spend today it is free money that you wouldn't have
otherwise.
In today's "hop, skip, jump" job market, though, you will also
need to prepare plans about what to do with your 401K money should
you leave the company. If you simply close out a 401K account
you will be hit with penalties and taxes. It is a much better
plan to simply roll over the 401K monies into a compatible IRA
or other retirement savings plan. Finally, if you think the 401K
is invested in a good mutual fund or stock you can usually leave
the 401K where it is and simply start another when you have a
chance.
Growing, growing, growing
If you don’t have access to a 401K plan you can use IRA (individual
retirement accounts) to start preparing your retirement nest egg.
You can also start investing your money in simple mutual funds
or stocks themselves. To a certain level, how you invest is less
important than investing itself. While you won't want to put all
your retirement funds into high-risk investment a good, balanced
portfolio will serve you well. There are many different options
available to you. Check out The Motley Fool for some excellent advice on entering the world of investing.
They have entire sections dedicated to preparing for your retirement
as well as other interesting investing information. There are
many other sources of retirement information available by doing
a simple query in your favorite search engine.
If you are working for yourself you might look into incorporation
as a method of preparing for your retirement and reducing tax
liabilities. Your individual corporation is often able to put
away much higher sums of money for your retirement as one of its
employees than other plans directed at the individual. While you
will need a certain level of income to make incorporation worth
the cost and the additional paperwork I am sure there are some
of you who will find this an interesting option. Talk to family,
friends and peers who have incorporated recently. I can almost
guarantee that retirement planning was one issue that led them
to incorporate. If your experience is like mine they will be very
happy to fill you in on all the issues.
Make technology work for you
Your technical skills can put you at an extreme advantage in the
retirement planning game. You already know how to access the information
available on the Internet. Others are still trying to research
companies and investment plans the old-fashioned way. Make your
technical knowledge work for you. Reach out and find the retirement
information that can help you reach your goals both now and in
the future.
It is a simple fact that no one is going to plan for your retirement
but you. Like so much in the business world you can't rely on
the cliché of the pension and the gold watch even if you work
for a large company for many years. Regardless of your current
work situation you need to do some research and get started this
week. Open that IRA, invest in those stocks, put some money in
a savings account. Set aside some money today so you can find
freedom in your future.
Douglas E. Welch is a freelance writer and computer consultant
in Van Nuys, California. Readers can discuss career issues with
other readers by joining the Career Opportunities Discussion on
Douglas' web page at: http://www.welchwrite.com/
He can reached via email at douglas@welchwrite.com |
