Follow these three rules, and retire comfortably - MarketWatch
The article has a bit more but the important points are here.
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When planning for retirement, you might focus on the size of your nest egg as the ultimate goal. Some planners put the range at $1 million to $3 million. But that’s putting the cart before the horse. It’s much better to consider how much income you will need.
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We have talked a bit about this here and talking numbers like having $1 million or whatever is hard to grasp for people including me. The points made in the article talk about the monthly income in an easier term. You do not need to have saved up that much but accumulating the right amount as you get closer to your retirement age will get you a pot of money that can generate lasting income given market conditions and investments.
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The mortgage mess is behind us and most of the silliest loan types are no longer available. But for most people, there’s still a very dangerous financial vehicle out there, which is the 30-year mortgage.
That might be a controversial statement, because 30-year loans account for most of U.S. mortgage financing. But if you take a real hard look at the numbers, you may find that if you buy “a little less house,” you can afford a 15-year loan. In your favor are lower interest rates and 180 fewer payments.
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This point to me is clear. Any time you spread your payments out longer you are ultimately paying more. It is a simple math equation.
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If your employer provides a 401(k) or other tax-deferred retirement savings plan, take advantage of it. Most employers offer a matching contribution, up to a certain percentage of your salary. That means a pretty hefty return on your investment during the first year. You also defer taxes on the amount you contribute, lowering your tax bill. Plus, you avoid the temptation of having the money pass through your hands on the way to the retirement account.
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This is another Doh! moment to me but some just do not understand. Here is my simplified answer. If you put in 5% of your pay and your employer matches that 5% that is 100% instant interest. You have doubled your money just by putting it away. The sooner you start that the better off you are in the long run due to the magic of compounding. No amount of procrastinating is going to help. Even a poor investment is better than nothing.
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