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Planning for a Comfortable Retirement

By Jan Bolder - December 5, 2013

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Whether you're 15 or 50, it's never too early to start planning for retirement. Here's a breakdown of what you should be looking at through the decades:

Teen Years

As a teenager, retirement planning is at its maximum benefit. Every dollar put aside during these years will pay off in the long run by far, which is why it's so important to put something- anything- away in savings or investments. For example, if a teen starts saving only $615 each year (not at all an unreasonable amount for a summer's work) at the age of 14 in an investment portfolio returning 11% each year, that will grow to about $1 million over 56 years. 


Waiting until you're an adult still won't have negative consequences on your retirement, but you shouldn't wait too much longer. With twenty-somethings starting on careers, the opportunity to put away even more. It's also a good time to cement good habits, like paying off your credit car in full each month, keeping track of your checkbook, and learning to say "no" to everything you want. 


This period in your life is perhaps the most crucial one, as you'll never again be able to save less to earn more. If you had put $5,000 in a Roth IRA at an 8% annual return in your teen years, it would have netted you $1.9 million by age 65. To reach the same amount if you start saving in your 30s, you'll have to put away a whopping $11,200 each year.


While starting your retirement now isn't ideal, it's still better to do something instead of despairing, and doing nothing. You'll have to put aside a fairly astronomical amount to get a decent return when you retire, or keep working later into life. But starting your retirement in your 40s does have one clear advantage: with all the years you've lived, you've acquired a wisdom and caninness that'll enable you to go about retirement planning the right way, such as investing 65% in stocks and 35% in bonds and cash.


At this point in your retirement planning, you belong to what's called the "sandwich generation", the demographic of people who are sandwiched in between multiple financial squeezes: your children's educations, your parents' health problems, mortgages and car payments, your own retirement, and existing between a lost decade in stocks combined with the worst recession in years. But the main benefit you can enjoy is you're currently at your highest earning income level ever, and can put away a good amount.


There's a good chance you may have lost a big chunk of your retirement savings because of the recession, a heavily-"fee-ed" 410(k), or any combination of factors. And at this age, that loss can sting harder than ever because there's not much time to make it up. But if you've managed to dodge that bullet, then you can breathe a sigh of relief as you've got hardly any time at all to wait until you can stop saving and start enjoying. 

But with tough economic times, an unfortunate reality is that many people will still have to continue working long past the age they though they would, as a dollar just doesn't go as far as it used to.