A common retirement problem with folks in there late 30’s or early 40’s, is when they realize that what they thought of as a retirement account is now viewed as a college savings for their children, or has been depleted due to extenuating circumstances. That being said, it’s never to late to start.
Define your Parameters: Simply stated, if you can only save $100 a month, don’t expect to be sipping Mai Tai’s by the beach in your retirement 20 years from now. $24,000 won’t go that far.
Work Backwards: If you are 40, are planning on working until your 65, living in retirement for another 20 years, needing $50,000 a year, then you will need one million dollars by the time you are 65. (50k x 20yrs)
Grow Your Money: Purchasing strong companies that pay high dividends is one way to grow your money. Re-Investing those dividends helps to further grow your money. If you’re employer offers a 401K, they may also match a percentage of your investments. Another growth potential. Tax shelters that help you postpone paying taxes, may not be growth per se’, but they do help preserve your working capital.
Rome Wasn’t Built In A Day, and you’re probably not going to make your million in a day, a week or even a month, so don’t go looking for that ‘get rich quick scheme’. They usually turn out to be ‘get poor quick’ schemes. Be smart with your investment, and build yourself a solid foundation.
Risk vs Reward: When people hear “higher risk = higher reward”, what they hear is higher reward, and forget about the risk. Don’t invest all your money in day trading, as it is a highly risky, and volatile environment. Sure, you might make that million in a few short years, or you could lose it all somewhere along the way. That being said, if you understand a particular market, take a small portion of your capital and start with that, leaving the majority of your investment capital in safer growth vehicles. Pit the two against each other, and see which does better over time.
Get Started: The important thing is to quit procrastinating, and get started now. The longer you wait, the less time you have to grow and build your retirement account. Of course, you could reclaim your kids college fund, calling it your retirement account instead. If they get mad, at least you won’t have to worry whether they were going to stick you in nursing home or not.