401(k)s & IRAs For Dummies

Chapter 11

Setting Up Your Savings Plan

IN THIS CHAPTER

Thinking about when you’ll retire

Considering all your sources of income in retirement

Finding ways to build your retirement savings

Spontaneity can be a lot of fun. But it’s the last thing you want when you’re planning for retirement. Saving for retirement involves delayed gratification, planning, and discipline, but today’s sound-bite society may find this news hard to swallow. Luckily, tools like a 401(k) and IRAs can help make the process less painful, because a lot of the saving is automatic after you set up the plan.

If you’re young, you may think it’s too soon to plan for something that’s 30 or 40 years away. The truth is that the earlier you start, the better, because your savings will have more time to build up through compounding (as the earnings on money in your account continue to earn even more money). Starting to save early will give you more freedom later to decide what you want to do.

On the other hand, if you’re already in your 40s or older, you may wonder whether it’s too late for you to plan. The bottom line is that it’s never too late. But you may find that you need to scale back some of your goals or increase ...