Investment basics Taxes and retirement

Start NOW Be consistent Don't cash in early

You have your whole future ahead of you - and best of all, time is on your side when it comes to retirement planning. Begin monthly investing today to help build your retirement nest egg for tomorrow. Put a certain amount of money away each month, and soon it becomes a habit. A good habit. So, while others are catching up 20 years before retirement, you could be well on your way.

Give it time to grow

When given enough time, even a small investment can become large - because of the power of compounding. Here's how it works: Let's say you have $10,000 to invest. Assume you can add $2,500 more to that each year (that
can be just over $100 a paycheck) and that your average
annual return will be 8%.

Start at:	By the age of 65
Age 20
Age 30		The bottom line: for every 10 years you put off saving for retirement, you will need to save three times as much each month to catch up. 1
Age 40
Age 50
Age 60

The difference between starting early and putting it off is amazing. Of course, actual results will vary, and this does not represent a particular investment. Taxes aren't considered.

Don't forget inflation

Before you get too excited about being close to a millionaire when you retire - remember that inflation can eat away at your spending power. What sounds like a lot of money today, probably won't feel like a lot 40 years from now.

Inflation has been minimal over the last few years. But even a little bit of inflation can add up over a 20- or 30-year period. Take this example to heart. A postage stamp in 1970 cost 6 cents. Today, that same stamp costs 37 cents. 2

Click here for a calculator that tells you how much you need to put away each month to maintain your current lifestyle in retirement.

An easy rule of thumb is that you'll probably need to replace 70%-90% of your preretirement income. If you made $50,000 a year (before taxes) you might need $35,000-$45,000 a year in retirement income to enjoy the standard you had before. 1

You'll be pulling money from three sources during your retirement years: Social Security, personal investments and your employer plans. Since Social Security was never meant to fully fund your retirement and employer pension plans are becoming a thing of the past, you are going to be one of your greatest sources of retirement income.

Source: Social Security Administration, 1998

The Social Security Administration mails statements to workers aged 25 and older showing an estimate of retirement benefits. Call (800) 772-1213 to request a free Personal Earnings and Benefits Statement.

How can you take charge?

For more information on investing for retirement, click here.

	Retirement Vehicles
	What is a mutual fund? It's an instrument that invests in many types of stocks, bonds and cash - or a combination of all three. With a mutual fund, you can spread your risk among several investments, versus just one stock.