(InvestigateTV) - It’s the dream. Retiring early so you have enough money to cover your expenses until the end of life.
The best way to get there is by saving for retirement. That means socking away dollars early and often.
“If your company offers a match, and you’re not contributing to get it that’s a big mistake. You want to get those dollars,” said Arielle O’Shea, a personal finance expert with NerdWallet.
She said to take advantage or your company's match if it’s offered and never leave money on the table.
“If your match is 3%, and you want to save 15% of your income, well, now you just have to save 12%. Your employer is saving 3% for you,” O’Shea said.
Where you put your money matters. Meaning 401(k) plans or IRA’s and not just regular savings accounts.
“It could be putting money in just a regular investment account like a taxable brokerage account instead of using tax advantaged options like an IRA or ROTH IRA those kinds of things matter,” O’Shea said.
You really want to take all the help you can get. And it's easier than ever to do that.
A quick online search yields hundreds of reputable financial advisors, and there’s now something called robo advisors. They typically charge very little to manage your money.
O’Shea recently wrote an article listing the 10 best.
“You won’t necessarily have the one-on-one relationship that you might have with a financial advisor. But if you’re young and you just need some benchmarks, you just need some goals, you need someone to take a look at what you’re doing and tell you what you can do better, robo advisor is a great option,” O’Shea said.
She said you can also do your own research.
“A lot of people ask their mom, their dad, their friends. Just make sure you're getting the right information, so you maybe want to crosscheck things with a reliable resource,” O’Shea said.
Click here to use the NerdWallet 401(k) calculator.
Retirement plans offer a simple concept. The more money in; the faster it grows over the long-term. They also get you in the habit of saving.
Michael Joyce works with the financial firm Agili. He said when his two oldest sons entered the work force, he told them to immediately put 10% of their salary into a 401(k). If you never see that money in your actual paycheck, then you won’t miss it.
If you are on a limited income, Joyce said to start off by setting aside a modest amount, maybe 2% or 3%.
“From there, maybe just add 1% more every six months. And just keep doing that until it hurts. And if you can do that, you're really going to build long-term financial security,” Joyce said.
Once you put the money into the retirement account, don’t take it out.
O'Shea said raiding your retirement is a common mistake.
“There are cases when you can take retirement money out of these accounts early, but a lot of times you'll pay a penalty. You might pay taxes, that sort of thing,” O’Shea said.
It’s money for retirement. Leave it alone. Even if you’re 40, you still have 20 years or more to let that money sit there and work for you.