Pay the debt first?Or save money and invest first?3 principles that must be followed for a decent retirement | why we repeatedly emphasize "save money, save money and then save money"

Although the government has passed various legislations and forcibly promoted various retirement pension plans in the past few decades-from Pension, 401K, IRAs, to the latest CalSaver-but from the Government Accountability Office¹Survey research shows thatAmong Americans over 55, only 20% have retirement plans.ArrivedWhen they retire, nearly half of them had no savings when they stopped working.

Pension plans have almost become history. Self-employment and gig economy are new employment models brought about by the great changes in social structure. In 2014, more than 5300 million Americans were "freelancers."By 2017, the scale of "freelancers" will reach 5730 million.This type of 1099 form group is different from office workers. They have no company benefits and no retirement plan.

Debt repayment and saving investment must be carried out simultaneously

"After paying the money back, invest again", you may not be able to bear the consequences of this kind of thinking.

According to AARP²Report:

• Among the 55-75-year-old baby boomers, 12% have not paid off their student loans;
• Among the 23-38-year-old millennials, 48% have not paid off their student loans;

The usual credit card debt of baby boomers is between $6,465 and $8,158. Born between 65 and 79, the 40-54-year-old generation now has credit card debt between $8,235 and $9,096.If you have to wait until all the money is paid off before investing in retirement, it means that you will lose many years of potential investment returns.

If you graduate at the age of 22 and only start investing at the age of 34, you will find that you will lose nearly $4,358.26.

And if you save 50 yuan a month after graduating from university and start depositing at $1000 (6% return), after 30 years, you will have more than 40,000 cash in your account.

Start saving and investing as early as possible.

Retirement income channels need to be diversified

In order to have a decent retirement life, it is very important to have a variety of sources of income-providing dividends from stocks, renting out a house or a room, or owning investment real estate.Some state governments provide good assistance programs to many first-time homebuyers to help people who don’t have much cash to buy real estate. You can "utilize this house" to the maximum-rent out rooms or any available vacant areas, and save The house becomes an asset that can generate cash income.

If you search for "first home purchase plan + your state", you will find a government plan to help first home buyers.These lending rules vary from state to state, but usually only apply to the primary residence of first-time home buyers.In California, you can visit CalHFA to find out.

Having other sources of income while working can help us pay off debts faster, which means we will have more savings.At the same time, this approach can also create a safe financial guarantee: if we lose our main source of income, but we have other sources of income, we don’t have to rely entirely on our emergency savings until we find a new job.

Snowball reinvestment of windfall income

We may suddenly receive a gift, an inheritance, or even a tax refund from the annual tax return. Putting this money into your retirement plan will bring great help and even miracles.Most of us have difficulty depositing money on a regular basis, but if we take a $2,000 bonus and deposit it into an IRA account, then we have put almost 1/3 of the allowable limit.At this time, the money can start to compound interest growth and earn interest for us.

Article summary

From Pensions, 401K, IRAs, to the latest CalSaver, the changes in laws and regulations regarding American retirement and pensions in the past few decades have meantThe social structure of the United States is undergoing tremendous changes.If the concept does not match the development of the society, if you do not fully understand and master the current status of retirement planning, a decent retirement life will eventually become a dream of Nan Ke.

In the article of RetireGuru©️ Retirement College, we sharedThe 7 most common post-retirement incomeWe hope that millennials and even younger community readers can make full use of our time advantage to plan and prepare.

"The best time to plant a tree is ten years ago, and then now."

(>>>Recommended reading: gadgets｜The American Personal Pension Smart Calculator, how much do I need to save every month?）

appendix:
01. "RETIREMENT SECURITY: Most Households Approaching Retirement Have Low Savings, an Update", 03/26/2019, GAO, https://www.gao.gov/products/GAO-19-442R
02. "Across Generations, Struggles With Student Loan Debt", 09/13/2018, AARP, https://bit.ly/2xBbp0r