Saving for Retirement Doesn’t Have to Be Scary

I always knew that I wanted to be self-employed. There are many benefits to running my own business, from spending more time with my family to being able to take on extra work when things are tight financially. However, there is also one major downside: There’s no company backing me up on important necessities like health insurance and retirement savings. Over the five years that I’ve run my own business, I’ve learned to purchase health care and take taxes out of my paychecks. However, one important item has continued to weigh on me: retirement savings.

For some reason, that part of being a responsible adult dragged up all sorts of emotional issues for me. My parents were also self-employed, but never saved for their own retirement, so in order to not repeat their past mistakes, I knew it was important to start tucking away money. However, I was paralyzed when it came to starting. I felt overwhelmed by the amount of options. It was also scary to think about retirement, which brought my mind straight to my own old age and mortality. Finally, there was the fact that whenever I was getting ready to begin saving, it seemed that a more pressing financial concern would pop up.

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At the beginning of February, I logged into Facebook and saw that a budgeting group that I’m a member of had a challenge: Do something this month that you’ve been putting off. There was only one thing that sprang to mind for me. At nearly 30, I had already missed out on years of saving for retirement, and I unfortunately wasn’t getting any younger. It was time to start a retirement savings account.

I gave myself the month to learn about retirement options and open an account. If you work full-time for an employer, I learned, chances are you have a retirement plan offered through work, most likely a 401(k). In that case, it’s important to find out if your employer offers a retirement match, which basically amounts to free money.

But not all retirement happens through employers, and with many millennials working untraditional jobs, a lot of us are on our own when it comes to retirement savings. In that case, it’s a good option to start an IRA, an Individual Retirement Account. If you’re like me, you’re wondering why you can’t just open a high-interest savings account, but retirement accounts are investments that are more likely to have significant growth over time, and they also have tax benefits. Those differ depending on whether you chose a traditional or Roth IRA account, so it’s important to understand the difference.

The more I read, the more nervous I got. With so many options, I felt paralyzed with fear over choosing the wrong one. I called Cindy Hounsell, the president of the Women’s Institute for a Secure Retirement, a nonprofit that helps women overcome the hurdles to retirement savings.

“Get a start,” she said. “If you don’t get started you’re going to waste time looking for the perfect plan.”

Hounsell pointed out that there are tons of reviews of retirement accounts online and that automated investing, when computers make trades so that the investor doesn’t need to know much about trading stock, has made getting started easy. The most important step is to start saving now. Hounsell pointed out that no one wants to think about aging, but it’s important to start saving in our 20s and 30s.

“No one ever thinks they’re going to get old,” she said. “But it goes fast.”

Even for millennials, it’s important to remember that every dollar we save today will work for us over time and allow us to have more saved when we retire. This compounding interest calculator shows how quickly your wealth can grow over the years just by having money tucked away. Hounsell also pointed out that many young parents save for their children’s education but don’t contribute the maximum amount to their retirement plans.

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I was certainly guilty of that. I had set up a college savings account for my daughter when I was on maternity leave, but three years later, I still haven’t opened a retirement account, something that is crucial for my own financial future.

“Get started with whatever you can,” she said. “This stuff is not as hard as people think.”

Toward the end of the month, I spent an hour reading reviews of retirement products and opened an account online in about 20 minutes. I selected a Roth IRA that required no minimum to open. Ideally it’s great to save 10 to 15 percent of your income toward retirement. However, I’m starting with what I can, just like Hounsell said, by contributing 5 percent of each check to my retirement. If 5 percent sounds like a challenge, pick an amount that works for you and start saving. I’ve noticed that I don’t even miss that money, and the relief I feel knowing that I’ve started to save for retirement is well worth missing out on a few lattes.

If you’re like me, waiting to get started on retirement savings, this is a great time of year to take action. Consider selling some household items post-spring cleaning and dedicating that money to opening a retirement account, or, If you have a little extra time on your hands, take up a side gig. That bonus money can make a big difference in your retirement savings. It turns out the biggest hurdle in retirement savings is getting started, and I’m so happy to have overcome it.

Originally published on June 7, 2017.

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