Retirement Investing: When To Start
What is a "401k plan"?
A 401k plan is a type of tax-deferred retirement plan that's usually put in place by a business. Your employer is going to have a 401k plan and you can take a certain percentage of your salary and defer it into this plan. That money will go into the 401k plan tax free. That money is going to grow fully tax-deferred, and then when you retire and start taking the money from that 401k plan, you'll be paying regular income taxes on that money.
Why is retirement investing important?
The reason why you want to think about retirement investing for yourself is to a large extent, nobody else is doing it for you. When you are going to retire in the future, you need to fund that retirement. It is not like in the old days when you would work for a company for your entire life, and when you retired they would provide a pension for you. Now, you need to save or invest a good amount of money to be able to live a comfortable retirement. It is not unreasonable to assume that you are going to live for thirty or forty years after you retire, so it is going to take a substantial amount of money to be able to provide the cash flow necessary to fund your retirement for that long a period of time.
