Getting started with retirement investing

I find that the biggest barrier for saving for retirement is that most people do not know where to start. People tend to get confused by paperwork, minimum investment, tax laws, what to invest in, etc. The main thing to do is to take the first step and get started. What to invest in can come later but simply putting the money aside each month or each pay period is the crucial first step.

The best option is to start with an employer sponsored plan. This can be a 401(k), SIMPLE IRA, or some other similar plan. Most of the time you fill out paperwork and the savings is deducted directly from your pay. This makes it easy for you as the money never hits your checking account. You can start by putting the money in a money market fund while you learn more about the other investment choices and can make an educated decision on what to invest in.

If your employer does not have or you are not eligible for the plan you need to venture out on your own. A Roth IRA is the best choice as all the money grows tax free. A lot of brokerages and mutual fund companies have a set minimum, usually $500 or $1000 to get started. A lot offer $0 minimum if you commit to a set monthly amount to automatically transfer in. I always suggest Vanguard as they offer low fees on accounts and have a good selection of funds to fit most peoples' needs.

If you are venturing on your own and need to meet a certain minimum start by transferring a set amount each month or each paycheck to a savings account. When you hit the minimum target open the account and make the transfers go there instead. Automating your savings will make sure you get it done and that it happens without temptation to spend the money elsewhere. While you are saving up for the minimum do your research and be sure what you want to invest your money in that fits your tolerance for risk and goals.

The time is now to stop with the excuses and save for retirement. The sooner the better. Time is in your favor when saving for retirement if you start early enough. Social Security should not be considered at all when calculating how much you need to retire. The system is mathematically upside down now and will only get worse. Benefits will shrink and starting age will get older and older. If you do end up with a some social security money then you have extra. Pretend like what money you have will be all you will ever have and you will be covered!