Forget about all the get-rich-quick schemes. Building a healthy retirement reserve is a slow and steady process that takes patience, consistency, and prudent investing. And planning for it is your individual responsibility as more investment decisions are being shifted from companies back to employees. Although the recessionâ€™s impact on retirement savings woke many of us up, studies show many still lack a savings plan, are fearful of investing, or may not be saving enough. This is your opportunity to give yourself a retirement report card. Black Enterprise teamed up with ING Direct to show you how making small contributions now can have a big impact later, how loans against your retirement savings can set you back, and how factors such as debt can delay your golden years.
So grab your laptop and follow the infographics on the next three pages to see how youâ€™re doing.
It Adds Up!
If you invested just $15 a week (the cost of about five cups of coffee) for 40 years = $115,000. OK, so maybe coffeeâ€™s not your thing. What are you spending $15 on that you could be used to fund your retirement with instead? A weekly manicure? Dining out? Find out how much you can save by reducing your spending at http://partners.leadfusion.com/tools/ingdirect/savings13/tool.fcs
*This formula is based on a 6% annual rate of return. If the investment were made in a tax-deferred vehicle such as an employerâ€™s 401(k), 403(b), or 457 plan, taxes would be due upon withdrawal at the investorâ€™s current tax rate.
The Power of Compounding Interest
Liz and Jenna, both 24, started working for the same employer on the same day. After a year, when she was eligible to participate in her employerâ€™s plan, Liz began making an annual contribution of $1,000, but stopped investing after 15 years. Jenna waited 10 years before joining the plan, then invested the same $1,000 a year until age 65. Both earned an 8% rate of return. Liz invested for 15 years (contributing $15,000 total) and Jenna for 30 years (contributing $30,000), yet Liz came out ahead at age 65 with just under $100,000 while Jenna has only $75,000.
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