Yes you should begin planning for retirement. It can be intimidating to sit down and try to figure out how much money you will need to retire. Additionally you may be intimidated at the estimated amount that you will need to save to retire comfortably. It is important to start now, because the sooner you start, the easier the sacrifices will be to make.
If you are completely confused consider visiting a financial planner for at least one session. The financial planner can sit down and go over your finances with you. She can help you to project how much money you will need to retire, and ways to find that money in your budget. She may give suggestions on what types of products you should be using to reach your goals. Some financial planners may sell products, and some do not. Before you purchase or invest in a product you need to understand what the risks and return on the product are.
Once you have figured out how much money you need to retire, you may want to break it down into smaller goals. You may set a goal to be saving fifteen percent of your income towards retirement by age thirty or you may choose to use dollar amounts as a goal. It is important to realize that there will come a point when your money is earning more than you are contributing to it. Your savings will really begin to grow then.
You may want to start by simply contributing to your 401K. This is a simple way to start investing, and as someone in your twenties the majority of your plan should be invested in aggressive funds or stocks. These are slightly riskier, but will give you a higher yield, as you grow closer to retirement you will want to change the way you invest your 401K is balanced. However, you should eventually begin to save in addition to your 401K with an IRA and other options. This may come after you have purchased your first home and paid off your debt.
If the thought of using investment tools is intimidating to you, you should find a financial planner who will explain your options to you. Additionally mutual funds spread the risk by having investments in several different stocks and companies. You may want to find a few good mutual funds to invest in, and simplify things that way as well.
