Retirement Planning

For those in “Generation X” – defined as people born between the mid-1960s and the early 1980s –  retirement   planning  sounds like something your parents or other “old people” would do. But guess what? With many “baby boomers” either already in the midst of  retirement  or viewing it on the horizon, “Generation X” will be the next generation of people to reach  retirement . Sure, it’s still a ways off, but those in their 30s and 40s need to begin focusing their investment  planning  on  retirement  and ensuring they have the type of  retirement  they are working so hard to enjoy. Here are some tips on  planning  for  retirement :

 Retirement  life in the future will be different than the  retirement  of today. It’ll be better in some ways, and worse in some ways. But the  retirement   planning  for today’s workforce needs to be far different than it was in yesteryear.

On the bright side, people are living longer than ever. As of 2007, the average life span of an American was 77.9 years, exactly 2.5 years more than the average life span in 1990 and more than four years more than the average life span in 1980. So investment  planning  for  retirement  has to account for a longer period of time now than a generation or two ago.

On the downside, Social Security will likely be a far less reliable source of income than it is now. And the likelihood is slim-and getting slimmer every year-that retirees 20 and 30 years from now will be able to rely on a work pension and enjoy lifetime benefits from their former employer. More and more, retirees will have to rely on their savings to cover the costs of living health insurance.

With people living longer and needing more money to do so,  retirement   planning  is an essential activity even for those who are halfway to the standard  retirement  age of 65. It can be an intimidating task to plan for a few decades into the future, especially with bills, rents and mortgages to pay right now, but procrastinating won’t make it any easier.

Putting even just a little bit of money now into a savings account that serves as a  retirement  savings  plan  can pay off later. The interest you get on money in a savings account will allow your initial investments to grow to something sustainable. A savings account will provide a place where you can accumulate capital earning a small interest rate until there is enough to invest in a reliable security that will yield you more like a municipal bond.

Another solid approach that can surely and steadily build a nest egg is to invest in long-term bonds. Upon maturation of the bond, you’ll get back your initial investment as well as all the interest that collected over the life of the bond. That’s a considerable amount of money for a 20- or 30-year bond-money that can provide a nice foundation for  retirement . And a municipal or government bond is as safe an investment as you can ever make. Buy one of these bonds now and enjoy the security of knowing that money will be there when you choose to retire.

However, the best approach when it comes to  retirement   planning  is to put money in a 401 (k) plan at work or in an IRA opened with an investment house. A 401 (k)  plan  in which an employer matches the employee’s contributions is the optimal means of investment  planning  for  retirement . Such plans basically mean any investment is automatically doubled. And 401 (k) plans further encourage savings because early withdrawals are accompanied by a penalty.

For those for whom a 401 (k) is not a  retirement   planning  option, an IRA is the next best thing. Money placed in this account is tax deferred and may be tax-deductible, depending on how much is invested each year.

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