The road to establishing a solid retirement lifestyle starts with a conversation, but will die without a strategy. Although the spirit may be willing the body needs nourishment. The nourishment in the area of retirement planning comes in the form of identifying practical steps that you can take to help you achieve success. A great first strategic step is participating in your employer’s retirement program .
No matter what type of employer sponsored plan that your employer offers the key is to participate. Your participation has several benefits starting with the ability to deduct your contributions on your taxes. The amount of your annual contributions can be deducted from your annual compensation potentially leading to tax savings for you. The ability to save money by reducing your tax liability is critical. As your financial wealth grows identifying tax reduction strategies allows you to keep more of your money.
Secondly, participation in your company’s retirement plans gives you the opportunity to earn interest on your investment. The compounding nature of interest over time can grow the amount of your initial investment. The key to taking advantage of this – is time. You have to participate in your employer’s retirement plan early and consistently. Early participation gives your money more time to grow and that’s important to reaching your retirement goal.
Finally, take advantage of any matching that your employer offers. Employers typically will match the contributions of an employee with a specified amount. The amount of the match will vary with each employer, but the salient point is take advantage of the free money. When an employer match is available you must make sure that you are making the maximum contribution in order to get all the free money that’s on the table.