Tags: Illusion | time | retirement | saving

Edward Jones' Thoma: 'The Illusion of Time' Deters Retirement Saving

By    |   Tuesday, 05 May 2015 11:00 AM

Numerous recent studies have shown that many of us aren't saving nearly enough to finance a decent lifestyle for ourselves in retirement.

So what's preventing us from doing the right thing? A "big one is certainly the illusion of time," Scott Thoma, investment strategist for Edward Jones, told Fox Business.com. In other words, we think we have more time than we actually do to build a retirement kitty.

"Many also don't understand how little steps can make a big difference," he said. "For example, the average tax refund is about $3,000 a year. Investing this, every year over 30 years with a 7 percent return, could be $300,000 over 30 years."

Inertia also is an obstacle. "Just a problem with getting started," Thoma said. "This is why steps such as auto-enrollment in employer-savings plans is important, automatically building a habit of savings."

Even if you are in the midst of paying off debt, "at least contribute enough to achieve the company match," and then worry about debt, Thoma advises.

He's referring to 401k plans. We are repeatedly advised by retirement experts to max out contributions to those plans. But many of us work at companies that don't have them, or we don't even work for a company full-time, freelancing instead.

Worry not, you still have vehicles to save for retirement. Emily Brandon, senior retirement editor for U.S. News & World Report lists several of them.
  • IRAs. You can defer paying income tax on up to $5,500 that you contribute to an IRA, $6,500 if you're at least 50. "IRAs give you a greater variety of investment options than 401(k) plans, and you can shop around for accounts and funds that charge especially low fees," Brandon explains.
  • Roth IRAs. "They have the same contribution limits as traditional IRAs, but they are taxed differently. You contribute after-tax dollars to Roth IRAs, and then you can withdraw the money, including investment earnings, tax-free in retirement," she writes.
  • If you have maxed out your IRA, you can build your retirement kitty further through a taxable investment account.
Related Stories:

© 2020 Newsmax Finance. All rights reserved.


   
1Like our page
2Share
StreetTalk
Numerous recent studies have shown that many of us aren't saving nearly enough to finance a decent lifestyle for ourselves in retirement.
Illusion, time, retirement, saving
361
2015-00-05
Tuesday, 05 May 2015 11:00 AM
Newsmax Media, Inc.
 
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved