Davis says that based on his current goals he would like to retire early. “Ideally I want to retire from corporate America at age 55 and concentrate on something I truly enjoy,â€ Davis says of how he envisions his golden years. “If I can pull $7,000 from my account each month I would be comfortable.â€
INVEST, EVEN WHEN YOU HAVE DEBT
After graduating from college, Jennifer Tyus, a law school student at Washington University in St. Louis, and April Tyus, a medical student at Saint Louis University, both had hefty student loan bills. For many recent graduates, retirement is placed on the back burner when debt and new living expenses put competing demands on a paycheck. But these St. Louis sisters knew their retirement savings didn’t have to suffer while they paid down their debts.
“My father taught us a different way of looking at our 401(k),â€ says Jennifer. “It wasn’t money that I would be missing out on, but actually it would put me in a lower taxable income bracket and would be compounding over the years.â€
Their father, Jerone, retired from his accounting position at the age of 58 and is now traveling the world and enjoying the fruits of his 38 years of labor.
“People think they’re missing that money from their paycheck and are so focused on the money that they don’t realize the tax advantages,â€ says Jennifer, who has chosen to aggressively save for retirement in her company’s 401(k) plan.
Since joining her firm at the age of 25, the now 32-year-old maxes out her 401(k) each year contributing the maximum allowable by the IRS, which is $16,500. Her company currently matches 60 cents on the dollar of her contribution.
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