There is not a mandatory minimum retirement age. Only one that applies toward taxes and social security benefits. Currently this minimum is 67 years old, which means you probably have quite some time till you’re done. Despite the large amount of time, it’s better to start your retirement fund sooner, rather then later.
Why You Should Have A Retirement Plan
The reason you ought to start sooner is so that you can take advantage of the nature of compound interest to get the most out of your investment. The idea behind any retirement account is not just to put money away for 40-50 years from now, but also to start building interest. Say you have an IRA that grows at 7.5% APY and has an initial principle investment of $1000 dollars that you invest at age 27. After the first year the IRA is worth $1075. After five years, the account is worth $1436. And by the time you retire, the account is worth close to $18,050. That’s without adding anything to your single $1000 initial deposit.
Types of Plans
There are a lot of options in terms of retirement plans. The main ones you should be aware of are 401(k), IRA, and Roth IRA
401(k)
401(k) plans are run through your employer and offer a variety of benefits. Things to look for would be matching programs where your employer matches a certain percentage of your salary that you contribute each year. These are less common than they used to be however if your employer offers it you should take advantage of the opportunity.
Individual Retirement Arrangements (IRA)
An IRA is an personal retirement fund started by the individual. Contributions to an IRA are tax deductible and accrue interest tax free, but are taxed as income when withdrawn at retirement.
Roth IRA
Roth IRAs are essentially the same as an IRA except contributions to a Roth IRA are not tax deductible, like 401(k) and IRA contributions are, but withdrawals from a Roth IRA are not taxed. An obvious benefit of a Roth IRA is that when you reach retirement you know exactly how much money you have to live off.
To learn more about planning for retirement check out Control Your Retirement Destiny
