Retirement 101
Investment options available for students
They’ve been described as the golden years: those pleasantly projected images of growing wiser, keeping the cookie jar full and sporting sweatshirts adorned with holiday-themed baubles. For many students, retirement may be the next available chance to shun work in the pursuit of the perfect golf swing. But if one doesn’t start saving for it now, they may not be able to enjoy that blissful aging.
It’s your future. It’s up to you to prepare for it,
said Matthew N. Smith, a junior from Eureka, Mont.
Many students look to retirement as a restful light at the end of the lengthy career tunnel, but without gearing up for years of living on a scant income, that age may be reached with more uneasiness than relief.
It may be a distant vision, but when it comes to investing, experts say that time is often the greatest, and certainly the most reliable tool.
Statistics show that for every 10 years you delay saving, you’ll have to save three times as much,
said Smith, an accounting major. It’s imperative to begin saving at an early age.
While such long-term saving may not have been necessary for those born in the 1930s and 1940s, times have since changed. People are living longer on the average and spending more time in retirement. As baby boomers reach retirement age, Social Security may break or be forced to change beyond recognition, according to www.forbes.com.
You can’t rely on the government or anyone else to fund your retirement,
Smith said.
Concerns over Social Security have driven many financial planners to find new solutions to retirement funding. Fortunately for students, there are ample opportunities and methods available for investing in the future.
Establish any kind of savings account and just start putting a little away every time you have an extra $5,
said Kent Kindred, a former First Security Bank President for the Preston, Idaho, branch. If you can budget just a small amount while you’re in school, you’ll be surprised how that money will grow over the next 50 years or so.
One type of savings account that can aid in retirement funding is an Individual Retirement Account, or IRA. According to www.IRA.com, an IRA is a personal savings plan that provides income tax advantages to individuals saving money for retirement purposes. Once established, a person can invest money into an IRA, up to varying amounts allowable under tax law. These contributions accumulate, tax-free, until the money is withdrawn.
Kindred also said that students should consider putting money into an investment account through a brokerage, as stocks and bonds have consistently proven to provide some of the largest and most consistent returns on investments.
The key is that you have a long time to put money into it,
Kindred said. If you would do that on a regular basis, that money is going to build up. As the economy turns upward, and by the time you reach 60 years old, you’ll have quite a little nest egg.
Another key is to look for benefits that potential employers provide. For example, a 401k plan provided by a company allows a portion of an employee’s salary to be directly deposited into an account, while taxes are deferred on the saved money until it is withdrawn.
Another factor to consider is the future of one’s family.
As members of the LDS Church, we have been asked to further our educations, and many of us will have big families,
Smith said. If we can learn to live on a smaller income, making consistent contributions to an educational savings account for our children, we can help them in the long run and make them better than what we are.
When considering investment plans, the most important factor is what will work for someone personally.
There are numerous methods of saving up provided by every company,
Smith said. People need to take the initiative and find out what will work for them and their lifestyle.
