By the year 2042, Social Security’s reserve trust funds could be exhausted. Though people disagree about when the money will run dry, and how to avoid it, it could happen in your lifetime. You can prepare for it, starting now.
IRAs (individual retirement accounts) offer young workers the opportunity to potentially receive higher benefits than the current system can afford to pay. They also offer an opportunity to build a nest egg for retirement that the government can’t take away.
If you have a job, you’re getting a temporary “raise” in 2011 thanks to the Tax Hike Prevention Act that Congress signed into law at the end of 2010. Since that money comes in small amounts with each paycheck rather than a lump sum, if you haven’t already planned how you’ll use it, it’s slipping away.
Invest regularly and you’ll be surprised at how the money grows due to compound interest. Consider contributing a portion of your paycheck in one kind of IRA called a Roth IRA.
For example, if you invest $25 a week in a Roth IRA until you retire (let’s say in 50 years) and the money grows at 5%, when you retire you’ll have $290,644 in tax-free money. If it grows at 8%, you’ll have $869,583. You only contributed $65,000 to the total—the rest is due to compound interest.
Visit CapEd today to start planning and investing for your future.
Copyright 2011 CUNA Inc.