We talked briefly about retirement savings in an earlier post, but it bears repeating.
After you have established The Emergency Fund you need to focus on Retirement savings. Why is that? Well if you don’t establish The Emergency Fund first, you may find yourself having to dip into these accounts.
By their nature, these funds will be harder to access and you will probably end up paying heavy penalties that are so excessive you might as well have just borrowed the money on a credit card.
This is the part where you really want to seek the advice of a licensed professional, but the bread and butter here are 401ks and IRAs. These are essentially the same thing except that the former is sponsored by an employer and the latter is created solely by you. They both have tax advantages that were created by the government to encourage people to save for retirement. The amount you need to put in these accounts will depend on your specific situation heavily, but there are plenty of retirement calculators and simulators on the internet that will allow you to project what your retirement would look like at different levels of saving.
Tomorrow: More Savings Opportunities