Retirement

Hello!

Before you lose the financial enthusiasm that often comes this time of year (due to New Year's, tax season, year-end investment account statements, or other reasons), I'd like to encourage you to give some attention to retirement. No matter what your age, it's never too early and never too late to work on retirement savings.

Some examples:
Young adults investing for the long term can make tremendous progress. A 22-year-old who invests $2,000/year every year through age 66 will invest a total of $90,000.
Since they're investing for the long term, they can invest more aggressively - suppose their investment earns an average annual return of 10%.
The result of $90,000 investment? -- *** $1,581,591 ***

What if that young adult had waited till age 32 to start? That would mean they would invest for 35 years - a total of $70,000.
Their result would be $596,254. Still a valuable contribution to retirement. But when you compare the two examples, it's clear that starting as early as possible does make a big difference.

Okay fine, you say - but I am way past 22 and even 32.

Suppose you're 52. You may choose less aggressive investments, since your time frame is shorter - let's estimate a 7% average annual investment return.
$2,000/year, earning 7%, for 15 years will yield over $50,000. That's not enough to fund your entire retirement, but it sure would be a nice chunk of extra money
If you invest it at 6% after retirement, that $50,000 could add $300/month to your retirement income for 30 years! Or it could be set aside for major expenses: necessities like a new roof, or luxuries like a special trip.

Even if you have only 5 years till retirement, it's definitely worth saving. Suppose you save $2,000/year, and invest more conservatively - we'll estimate a 6% return. Your result would be $11,274. If you could save $3,000/year in those last five years, you would accumulate $16,911. Either way, it will be extra money you'll be thankful for later on.

It's never too early and it's never too late to save for retirement!
Taking Control of Your Money is the way to find money to save - Keep moving through the web course to find ways to make sure your money is going to your top priorities - including retirement, I hope!

%%%%%%%%%%%%%%%%%%%%%%%%%%%
Barb Wollan
ISU Extension Family Resource Management Specialist
311 Bank St, Webster City IA 50595
ph: 515-832-9597; fax: 515-832-9599
bwollan@iastate.edu