Let's Talk About Money: Retirement Plans—Is It Too Early?

Let's face it—thinking about the future is scary! Especially for youngsters like ourselves. You know what else is scary? Finances for the future. In this series of "Let's Talk about Money," I will be giving some simple information and benefits of starting that retirement fund.

What is a Simple IRA?

In most cases, if you work for a company or a business of some sort, if you have been there for about a year or so, they will introduce you to a Simple IRA, which is a Simple Individual Retirement Account plan through that company. In most cases, these retirement plans are easy to start and easy to keep, especially if you are planning to be with that specific company for a period of time. Companies, in most cases, will match up to three percent of what you put in each year. This means that, for every $100 you put in, the company will put in an extra three dollars on your behalf, which does not seem like much, but in the long run, that could be up to $36 extra a month, not out of your pocket, if you just had $100 put in each month. Plus, it is easy and you do not have to remember to put money into your IRA because you get to choose how much money value or percent-wise you want taken out of each paycheck and put directly into your IRA account. Talk to your company or business you are an employee at for more information regarding their more specific Simple IRA plans.

Who can start one?

• Must be 21+
• Make at least $5,000 a year.
• Other rules/regulations may apply. Check with your company.

Why is it a good idea?

As a 21-year-old myself, the idea of retirement seems eons away from my current reality. I also feel that my life just began and the idea of retirement for me seems like the end goal of life. But is it too early to start planning for it? I say if the opportunity to start saving for it becomes available, why not?! Especially if you work in a company that has a Simple IRA plan that they also match what you put in to a certain percent. This is a simple way for you to make money to ensure you have a bright future. In this day and age, everything and anything costs money (nothing is really free these days). Preparing for your future to better yourself is always a great investment, so why not? Even if it is as small as $35 a pay period ($70 if you have two pay periods a month), this equates to approximately $840 a year (for a 12 month period) and your company (if they match up to three percent) will give you an extra $25 for your retirement fund just because you are investing in yourself.

Sure, it may not seem like a lot, but looking toward the future, starting young gives you a better opportunity to be able to enjoy your future retirement and not stress so much about not having any money and the thought of working for the rest of your life. The other nice thing about these investments: if you quit that company and join a new company that has a Simple IRA program, you can roll over your IRA (without losing anything) into that new program to continue adding to it.

In this sense of things, you really can't lose when you invest in your future.

For more information (if you are the reading type), check out this website!

Schwab: Simple IRA

A special thanks to google.com for the image at the beginning of this post.

Stay tuned for future additions to this series "Let's Talk About Money."