I am a 36 year old who recently filed bankruptcy and has no savings. I am scared to death of a 401(k) plan. What is the best and safest way for me to start saving for my retirement?
“I applaud your wanting to start saving for retirement now,” said FPA member Mike Orf, CFP®. “The 65 year old you will thank you. I would bet that you are afraid of 401(k)s because you don't understand them. If you have access to a 401(k) at work, get someone you trust to explain it to you. Steady contributions can build substantial wealth over time. If you have good investment choices and an employer match option, it is the best/safest way to grow your retirement funds.
“Before plunging into your retirement plan, I would advise that you set up a budget. Listing your income and expenses on paper will give you an idea of what you can afford to put aside every paycheck for the future. The best retirement plan in the world is useless unless you can stick with it. Success will follow being consistent. For your goal, I would like to see you save at least 15 percent of every paycheck from now on. It is okay to start with less, but that is where you want to strive to be.”