by Kemyia Austin

Created on: January 25, 2010   Last Updated: January 26, 2010

Retirement is inevitable and people should be aware that if you can't take care of yourself, someone will have that burden. You might want to prepare yourself for retirement before that responsibility becomes your children's and your children's children. When that happens, they will begin to resent you for that and we want to prevent that. There are certain things you can do to prepare for retirement.

One thing is to set up a savings account. Any bank will allow you to open a checking account and they will give you an option to set up a savings account as well. Once you do that, take out $50 or 1% of your paycheck and place that into your savings. Don't pay attention to your savings and don't take any money out. If you get paid twice a month and If you start your job at the age of 25 and you continue to work until the age of 65, you would have saved $48,000 by retirement. If your salary is $30,000 a year and you save %5, by the time you retire, you will have $60,000. It is important to budget what you can afford to put away. If you put more away than you can afford, you will be tempted to take money from your savings, that is how you lose track of spending.

Another way you can save for retirement is taxes. Everyone knows when tax time comes around because they start planning on expensive cars, a new television, vacation, and much more. If you would take half of your tax return and place that into your savings, you would be surprised at how much you will have by retirement. Let's take the figures from above. If you make $30,000 a year and your tax refund is about $2500, half of that would be placed in your savings account. By the time retirement comes around, you would have $50,000. Add that to what you set aside out of each paycheck and your retirement is now $110,000. Oh no, we're not done yet.

There are special companies that allow you to place a percentage of your paycheck into a 401K and the company will match. If your company does not, get a financial adviser so that they can help you plan a 401K. Financial advisers are not expensive, the consulting stage is usually free. They only charge once you decide to use the services and most of them will take off what you earn on your 401K. Retirement plans are usually 1% of what you make so if you make $30,000, you would pay $300 for the plan and by the time you retire, you would have more than $120,000. So far, your retirement bank is $230,000. Hey, we are not done yet.

Savings bonds are important and I didn't think they were until my advisor explained it to me. The market is fickle and many things go wrong. Your stock may plumit or it may rise above costing prices. If you risk yourself, you have the ability to make a lot of money. I am what they call a safe bidder which means I don't risk money to get money. I have the most stable 401K and stock account because I want to make sure that I have my money at the end of the day. That does not make me a lot of money but I am stable. By the time I retire, my account will be able to sustain me. If you continue with your salary, you have a possible earning of more than $150,000 by retirement. So now, your retirement bank is $380,000.

By wise savings and budgeting, you would have enough money for retirement and vacation if you wanted. It is important to plan and budget for life and these tips will help you get there. Don't place the burden of your retirement on family, friends, and society. Then it becomes a problem because taxes are there to help you but we would be better as a country if we learn to help ourselves.

Learn more about this author, Kemyia Austin.
Click here to send this author comments or questions.