401k And Ira

401k And Ira For What?

It's funny how we all dream of that day when we can stop working for the man and do whatever we want for a change. No more suits, no more makeup, no more uncomfortable shoes just to look OK. And most of all, no more boring annoying meaningless tasks. Retirement, the golden years, supposedly, when we enjoy the fruits of our labor. And what does the 401K and/or an IRA have to do with it?

Hey, you've got a pension and social security, right? There's some bad news here, I'm afraid. Unless you're very lucky indeed, that pension - if you get it - isn't going to go as far as you want to believe. And Social Security? They are going to run out of funds. I don't know what the government will end up doing to shore up the mess, but you can probably expect to get the short end of a very sharp stick.

If you're like 80 to 90% of the population, you probably haven't given your retirement anywhere near the kind of attention you should. This isn't a criticism by the way, just reality. It can be hard enough to get through the month without also trying to figure out how you'll survive when you retire. Maybe you're one of the lucky ones and have an excellent employer retirement plan. There are some good ones. But if you're counting on Social Security, you may want to run some numbers on how much it costs to live and what you're likely to receive. The results may shock you.

For 401K plans, your employer must be involved and offer the plan so not every job gives you the potential advantages of a 401K. An IRA or Individual Retirement Account, is totally up to you, however. This is something you can do whether you have an employer pension plan, a 401K or any other sort of retirement plan. The limits for IRAs are generally much lower than 401K contribution limits, but they still provide important additional assets to use in planning for your retirement.

The sooner you start building assets for your retirement, a 401K, an IRA, other long range investments and savings, the more likely it is that you will be able to truly enjoy your retirement. The longer you wait to begin building your retirement funds the more difficult - and expensive - it becomes. Even at fairly low interest rates, over 30 to 40 years, a relatively small monthly contribution to your retirement funds can turn into a serious amount of money. The lesson? Start now. Don't stop. This isn't an optional activity, treat it as seriously as your mortgage, rent or medical plan payments.

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