A Weekly ComputorEdge Column by Douglas E. Welch





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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:

He can reached via email at

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