Benefits of Starting a Retirement Fund Early

When you’re just out of college and working at your first full-time job, planning for retirement isn’t top of mind – but it should be. The key to having enough funds saved for the things you may want to do in your golden years is to start planning early when you’re starting your career.

There are several benefits to starting a retirement fund early and sticking with it. Fortunately, many employers offer some type of retirement savings, such as a 401K, so you can start saving right away. Here are some things to know about retirement saving:

Employer options vary

Most employers give you the option to contribute to a 401(k) fund. Most will match your contribution to a certain amount while others contribute based on other statistics, for instance, they will match $1 per hour worked.

The most common way is matching a percentage that you contribute. For instance, if you contribute three percent of your gross income each pay period, they will put in an equal amount of money into your retirement fund. It’s free money, plain and simple, and it’s up to you to take advantage of it.

Deductions are untaxed

Your total deductions to an employer retirement fund decrease the amount you owe for taxes at the end of the year. For instance, if you earned $45,000, and contributed $3,000 to a retirement fund, then you owe tax on $42,000. If you’re single, this is an easy way to earn more of a refund or owe less than you might.

Your money compounds over time

Over time, the interest accrued in your retirement fund can add up to thousands of dollars. For instance, a person with a $10,000 balance in their account with a return rate of seven percent will accrue $700. If the rate stays the same over five years, that person will have $13,500 in their retirement, and that’s based on if they don’t contribute anymore to their fund.

Think about the age which you want to retire

The average retirement age is 62, but is that when you want to retire? Maybe you want to retire a few years earlier than that OR you wouldn’t mind working a few more years, until age 67 or 70.

To understand how much you can save before you call it quits, use retirement calculators to see how much you can save by starting a retirement account. Travis Credit Union provides access to retirement and other financial calculators.

Visit for more information.

Retirement Calculators Savings Accounts