How To Build Retirement Funds

It is a special, and rare, young person who starts saving money for retirement out of his or her first paychecks at a first job. Starting early in this career-long task is always advisable, but more often than not an alarm goes off in the heads of 30-something workers as they start to see retirement edging closer and closer—and start thinking about where those funds will come from. Financial planners consider 25 years an absolute minimum for pulling off a successful savings and investment plan for retirement funds. Those who put more years into their plans can either put in a little less each year or plan for a higher retirement income. The main truths about the plan remain unchanged—save as much as you can for as long as you can and get the best return you can on your investments. Anyone can start saving on their own, but pretty soon it will come time for a professional plan. You can hit the books, take a class or two at the university extension or hire a professional, such as a Certified Financial Planner (CFP), but one way or another you will have to "crunch the numbers" to see what you need to do, so that you have the funds to live how you want to live in retirement. Even when you do consult a professional, most of what this person will do is based on what you say about where you want to live, when you want to retire, what standard of living you wish to maintain, etc. The planner will then "reverse engineer" the numbers, and tell you what you need to save, for how many years, in what kinds of investments, in order to have the income you will need in the future. There is a little bit of "crystal gazing" involved, in that some assumptions have to be made concerning future rates of inflation, etc., but retirement funds are definitely calculated carefully and without any "magical" assumptions about a decade of 20 percent annual returns. Grounded firmly in reality, you will find that there are many, many creative ways to turn years of disciplined saving into a great, big cache of retirement funds. Comments (0) Show/Hide comments Write comment Show/Hide comment form Name Email Website Title Comment Add Comment