still young, you have a longer time horizon to reach your goals, so it’s wise to start saving for your future now. The good news is it’ll give you more time to benefit from the magic of compound interest. Investing $5 in a mutual fund every day over 40 years, Summers says, will yield $1 million. She adds that the average annual return of the stock market has been 12%.
WHAT YOU SHOULD KNOW
1. Save at least 10% — 15% of your after-tax income. Treat yourself like a bill. This is the only way to grow your emergency fund as well as build a retirement nest egg.
2. Social Security should not be your only source of retirement income. Think of it as one piece of the pie and be sure to supplement that income through your 401(k), IRA, and other investments.
3. Educate yourself about saving and investing. Waiting for Prince Charming to ride in and carry you off into financial bliss is not a sound plan.
4. Retirement savings are just that. It’s best to earmark these funds and put them into retirement accounts. Don’t put them into readily accessible savings and checking accounts that you might be tempted to use as piggy banks.