Retirement is Important

If I've learned one thing over the many years from Precious over at Frugal Makes Cents it's that planning for retirement has to start young. My DH and I are 25 and don't have friends that talk about IRA's and maxing out your yearly contributions. So we talk to each other about different topics, do individual research and then we discuss at the dinner table.

Our way is not the "RIGHT" way or perfect for anyone else. I'm merely sharing my thoughts on the topic.
We have 3 different methods:

Sharebuilders/For fun- We have been buying stocks together via sharebuilder in a for fun type of capacity. We haven't sold any over the past few years but we've seen an 8% growth so far in our purchases.

DH's company does stock options instead of a 401K and quarterly cash bonuses.

• We take the stock
• We take the quarterly cash bonus and I set aside $100 per month into a Roth IRA in his name to max out the annual contribution limit. You can deposit $5K without penalties for 2010 (I believe you have until April 1 to do this as well). A Roth account uses after tax dollars, but you do not pay taxes on the earnings if you do not cash in early. Since we are just starting out our tax bracket is much lower than we expect it to be when we reach retirement age, and we are looking forward to reaping those benefits in the future. We have found we like mutual funds that are target date based (these become more conservative as the target date approaches......we can afford to go after more aggressive funds when we are younger with bounceback time).

My company has pretax 401K and a 6% match and Quarterly cash bonuses.

• For the first 9 months of 2010 we deposited 6% into my account to get the 6% company match.
• For the last 3 months we upped it to 10% just because we had extra money in the budget and thought we should shuffle it toward retirement.
• I check the box for my quarterly bonus to have retirement deductions as well since we count that as free money in our budget and usually put them into the savings accounts.
• My company annouced today that as an added bonus for 2010 they will take the total employee contribution for 2010 and will add a 25% of that total into our retirement accounts as a kicker for a good year.
• While the added 25% retirement bonus contribution hasn't completely cleared yet I decided to review our 401K's.  So far we have enough money saved for 2 years worth at our current salaries.

I realize this is no where near enough but it's a good feeling to see some progress. I suggest others who may not have planned yet start to look toward the future.....it can't hurt. There is something out there for everyone even if it's just CD's and bonds if you are afraid of the stock market.

DH and I are trying to evaluate every purchase we make now so that we can live worry free in the future. I find the different money articles on MSN, Yahoo, CNN, etc a little overwhelming when they talk all gloom and doom if you don't have 1 million dollars saved for retirement you will have to go back to work etc.  DH and I have expenses of about $35,000 per year but that includes rent, student loans, and a car payment. When we retire we will have a house and it will be paid off or we will not retire. As far as cars- we have 2 cars now with 1 payment, we will most likely only have 1 car during retirement it is less insurance, licensing fees, and upkeep.  

As always email me if you have questions.