1. Retirement Planning For 20-Somethings: Introduction
  2. Retirement Planning For 20-Somethings: When You Should Start Planning
  3. Retirement Planning For 20-Somethings: Goal Setting
  4. Retirement Planning For 20-Somethings: Saving Options
  5. Retirement Planning For 20-Somethings: Choosing Savings Accounts
  6. Retirement Planning For 20-Somethings: How Much Should You Add To Your Retirement Nest Egg?
  7. Retirement Planning For 20-Somethings: Signing Up For Retirement Savings Accounts
  8. Retirement Planning For 20-Somethings: Choosing And Managing Your Investments
  9. Retirement Planning For 20-Somethings: Incorporating Lifecycles In Your Planning
  10. Retirement Planning For 20-Somethings: Retirement Resources
  11. Retirement Planning For 20-Somethings: Conclusion

There are differing opinions on the percentage of pre-retirement income an individual will need to finance his or her retirement years. Ultimately, your needs will depend on your planned retirement lifestyle and the amount that would be required to finance such a lifestyle. However, a reasonable estimate can be made so as to design and implement a suitable retirement program. While it is important to add as much as you can to your retirement nest egg, care must be taken to ensure that you do not add more than you can afford, as doing so can negatively impact your financial profile and the amounts that you can afford to add in future years. To determine how much you can add to your retirement savings accounts, prepare a budget to show how much you have available to save.

When creating your budget, be sure to include details about all sources of income and all expenses, as well as your long-term and short-term financial goals. This will help you to determine how much to allocate to your long-term and short-term savings. If necessary, consider cutting back on non-essential expense items to increase the amount available for funding your retirement accounts.

Outstanding debts should not be ignored as the repayments are part of your expenses. If your amount of outstanding debt is high, you may need to implement a debt management strategy to help you pay off your debt quickly.

The Negative Impact of Saving Too Much
Saving more than you can afford may result in a shortage of funds to cover your ordinary expenses. This shortage may result in you being forced to make unwise financial decisions, such as withdrawing amounts from IRAs or using credit cards to cover expenses that should be covered with your income. Withdrawals from your IRA would be treated as ordinary income on your tax return for the year and may be subject to a 10% early distribution penalty. Amounts charged to your credit would accrue interest, which can add up to a significant cost if the balance continuously increases. If this becomes an unmanageable debt, it could force you to allocate amounts towards paying down the debt instead of adding those amounts to your retirement savings.


Retirement Planning For 20-Somethings: Signing Up For Retirement Savings Accounts
Related Articles
  1. Retirement

    Managing Income During Retirement

    Learn some sensible strategies for making your hard-earned savings last for as long as you need them.
  2. Retirement

    Saving for Retirement: The Quest for Success

    We'll show you how to set yourself up to retire in style.
  3. Financial Advisor

    10 Tips for Achieving Financial Security

    Follow this sound advice and plan for a comfortable future.
  4. Retirement

    Top 3 Retirement Savings Tips For 55- To 64-Year-Olds

    Find ways to save money and increase your nest egg for the fast-approaching golden years.
  5. Retirement

    Can You Retire in Five Years?

    The countdown is on. Find out whether you'll be ready to leave the working world.
  6. Retirement

    Retirement Lessons To Teach Your Children

    If your retirement plan hasn't worked out, at least your children can learn from your mistakes.
  7. Retirement

    Retiring Soon? 10 Things to Consider First

    Consider these 10 questions and to-dos before you retire to make sure you are ready.
  8. Retirement

    How to Make Early Retirement a Reality 

    Early retirement doesn't have to just be a pipe dream if you've got a plan for making it happen.
Frequently Asked Questions
  1. When are Beneficiaries of a Will Notified?

    Learn when the beneficiaries of a will must be notified, and understand how this requirement varies depending on whether ...
  2. Why Does Larry Page Pay Himself a $1 Salary?

    Google co-founder Larry Page continues to take an annual salary of only $1 as chief executive officer.
  3. What is Common Stock and Preferred Stock?

    Learn about the differences between common and preferred shares. Explore situations where preferred shares have more favorable ...
  4. Can CareCredit be Used for Family Members?

    Learn more about the available options that CareCredit offers to pay for out-of-pocket medical procedures with little to ...
Trading Center