Yes, I know, the title of this post might sound a little funky. If you’re still in school, why would you be thinking about retirement?! My thought is that you can never start saving for retirement too early. Hear me out…
Over the summer, you probably worked really hard at a summer job and earned a bunch of money. I’m sure that you’ll use some of that money for your books for the semester, and for your entertainment – dinner and a movie with friends, etc. These are all important things to use your money for.
Have you also saved some of it? Remember we talked about opening checking and savings accounts last month (revisit that post here). It’s important to put some of the money you earned in a savings account so that it earns money while you’re in school! We’ll talk more about the miracle of compound interest a little later. It’s an interesting subject…trust me!
Also, remember we talked about 401k plans (revisit that post here)? Well, if you’re not eligible for one because your employer doesn’t offer one, you can still save for retirement. When you turn 18, you are eligible to open an Individual Retirement Account (IRA). Consider depositing some of your hard-earned summer savings in a retirement account. When you get to be retirement age, you’ll be happy that you did!
Like a 401k plan, an IRA will allow you to invest in mutual funds and sometimes even stocks. Each plan has its own selection of funds in which to invest. In a later post, we’ll discuss more about the different types of retirement plans and investments.
Fun fact for today – The motto “In God We Trust” didn’t appear on Federal Reserve notes until 1963 (Source: http://www.federalreserveeducation.org/about-the-fed/structure-and-functions/financial-services/fun_facts.cfm)