by Lori Salsgiver

Created on: May 21, 2008

As contributing members of society, you are never too young to start planning for retirement. After selling life insurance for several years, I realized that 75% of my clients were not prepared financially for retirement. With the average age of my clients being 45 and over, most did not have life insurance or a retirement plan in place. Unfortunately, too many of us put all of our resources into one bag when planning for retirement instead of dividing it among many bags. Younger generations cannot expect or anticipate that Social Security will be available when we retire. We all need to make steps toward planning for retirement and take advantage of 401K plans offered either at work or with an investing firm.

One of the most common problems facing retirement plans is we simply don't plan ahead and put off investing till our late 30's to mid 40's. We need to realize in our twenties as we enter the work force, that investing in a 401k plan at a young age will reap substantial benefits. You may not make a lot of money in an entry level position but putting aside 3% of your income will put you further ahead in years to come. 401k plans can be intimidating but I recommend sitting down with your HR manager to answer any questions or take a free 401k class at a local library. The other advantage to investing in a 401k plan is that your contributions are not tax deductible until after you start drawing on the account at retirement. Again starting at a young age whether you're married or not will put you in a better financial position for retirement then if you put it for another 10 years.

You may be asking how much you should invest into a 401k plan? Before making this decision, calculate how much disposable income you have left over at the end of each month after bills and other obligations. Decide how much you can comfortably afford without causing yourself a hardship. Obviously if you have a lower paying job, you may only be able to set aside 1% of your pay, but remember a small investment now is better then nothing. It would be most beneficial if you can afford to put 10% of your income into a 401K. Look into the cap that is allocated by your company or financial institution to help determine your full capacity. Young investors do not be discouraged by your small investments because a lot of companies match your contributions to your 401k. Many companies will not match your contributions of 100% at first but will over a period of 2-5 years. 401k plans are a long-term

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