Monday, December 8, 2008

Contemplating Retirement Savings

I know that I am only 25 years old, but I am starting to think about saving for retirement. I think it's the appropriate time to start working on this, especially since I plan to "retire" early. 
I don't know much about retirement savings, and there is no plan through my job. 

I have a few options to consider. Firstly, I could get a Roth IRA. I've been thinking about this a lot, but my concern is that this is something that I would have to manage a little, and with the stock market dipping, it seems that a lot of IRA's have lost value. People seem to not be concerned with this as it will "go back up again", but what if the stock market crashes right before you plan to retire? What is that value disappears. I'm not a fan of investing in the stock market in general because to me, it feels like gambling. 

My next idea is to start a CD ladder and just start socking money away. I'd get a guaranteed rate of return and my money would be pretty safe. I don't get tax benefits, but it seems so much more stable. 

I can understand how people go the 401(k) route or other such programs if a company is matching the money that will be put in there, but I don't get that luxury. 

This is quite a conundrum for me and I really would like to have a plan in place for my 2009 Financial goals. So what do you think? What would you do if you were me? I welcome any and all advice!


FrugalWannabe said...

My place of work does not match either, but I'm still putting money into the 401k. It's pre-tax, so my taxable income is reduced at tax time. Also, I have a long ways to go before retirement and I do believe the stock market will recover in the next few years.

I have my investments in age adjusted mutual funds, so as I get older stocks get converted into bonds and other more stable investments, so a stock crash right before I retire wouldn't hit me so hard.

We're also doing a CD ladder for more immediate cash needs (if DD needs braces in a few years, etc.) and DH has a separate Roth IRA. Each investment has it's pros and cons so it really depends what's best for your needs.

Family Man said...

It's never too early to start, I would so it now, even though the return won't be much.