Does Anyone Here Know The Best Way To Start Up A Nonprofit Organization?

Does anyone know of a smart way to start saving money for retirement?

• I'm 25 1/2 and I'm ready to start saving for my retirment (Better late then never, right?) Right now I'm making about $1,000 a month (gross). How much should I start putting away (weekly or monthly) for retirment. Any suggestions? The more details the better. Thanks.

• Answer:

  It's great that you are getting an early start! The right place to start is with your employer. If your employer does any matching, that is free money, so you should definitely take it. For an amount, it looks to me like you could scrape by at around $60-$70 per month or so, but that assumes social security won't have changed much between now and then, and that you won't be increasing your income very much. I think both of those are probably faulty assumptions, so I think shooting for $100 or even a bit higher would be great. You are probably in a fairly low tax bracket right now, perhaps even compared to retirement. So it might be a very good idea to look into Roth IRAs. You have to pay taxes now on money that you put into a Roth IRA, but do not have to pay taxes when you take that money out. Since your tax rate is probably lower now than it will be when you retire, AND that account will be worth a whole lot more when you retire than it is worth today, a Roth probably makes a lot of sense right now. Speaking of the account being worth a whole lot more, do be sure that you invest appropriately. Just putting these funds into a savings account or a CD will not help you get ahead of inflation enough over the many years you have before you retire. Because things get more expensive with inflation, your money needs to grow faster than inflation too. Here's an article about that, if you want to read more: http://www.vilkri.com/resources/reader.php/purchasingpower_risk Also, watch out for management fees when you invest your money. http://www.vilkri.com/resources/reader.php/management_fee These are the fees that are charged to "manage" a mutual fund. Management fees can take a serious bite out of what you earn! So you might want to look into Exchange Traded Funds as a less expensive alternative. There is a list of discount brokers here: http://www.vilkri.com/resources/reader.php/discount_broker This might help you find some companies to manage your investments with lower fees, so that you can earn more with them. Something else you should be sure to consider along with your retirement savings is an emergency fund. Be sure that you somewhere have 3-6 months of income saved up in case you should lose your job, have a medical emergency, or the like. (Medical emergencies are the top cause of bankruptcy in the U.S.) If you need to save a little less for retirement for a few months while you build up some emergency fund, that may be prudent. It would be bad to have to dig into your retirement savings if you had an emergency. Be sure that emergency fund is somewhere you can get to it quickly -- it is a good idea to have that in a money market, CD, or savings account rather than investments, because you don't know when you will need it. (Imagine you had to take out your investments right now with the markets low -- you would lose money. So best not to have money invested you might need right away.) Finally, a little word of encouragement for some belt tightening to really make nice sized retirement contributions now. You have about 40 years until you need to retire. Each dollar you save today, if invested well, should grow to about $14 over the next 40 years. By contrast, the dollars you save when you are 45 will grow to just $4 each by the time you retire. So it is well worth it to make a good solid start today. Plus, it is a lot easier to set good savings habits now and "relax" a bit when you are older than vice versa. Trust me! Best of luck!