I'm only a 21 yo college student, how can I start contributing to my retirement?

Question

I dont really have a permanent job, but I heard that the sooner you contribute, the more you have later. I just want to know the options and what I can do about it. Is there anything I can do?

Answer 1

You can start a 401(k) or Roth IRA and other types of retirement plans at the various financial sites like fidelity.com, that is first step.

Try to find a company that will match your contributions when you are employed so that you basically get "free money" for contributing, i.e. if you contribute 5% of salary they match it up to 3% with their money.

Start saving ASAP and find a high interest rate. Emigrant Direct bank offers a 5.15% savings rate for their online accounts, the best I've found yet. Make your deposits automatic from your checking account so you don't have to remember to save.

Write yourself a budget and figure out where all your money goes to (you'll be surprised at how the little things add up)

If you can, put away at least $175/ month in savings. At a 10% return over 40 years you'll have just over a million dollars, a decent amount to retire with. If you can't do that much then figure out what you can do and start saving. The rewards from interest can be great

The best thing you can do is start saving, period. Any bit you put away now will help.

Answer 2

You're smart to be thinking about this now! The most difficult part of my job is to convince people to pay themselves first by investing in retirement.

That said - as long as you're working (part time or otherwise) you can have an IRA. The max contribution this year is $5000.

As soon as you have a permanent job, put your maximum limit with a match into your tax qualified plan (401 (k) etc.).

Keep up the good work - the power of compounding interest is incredible!

Answer 3

Finishing college is a sure way to ensure a good retirement. Also, when you do graduate, try to get a good job with a company that offers benefits, including retirement benefits. For now, even a few dollars in a savings account adds up.