Penny Wise: Retirement planning needs to start now

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By Maria Duran

Retirement may seem far way for many students, but it is essential to begin thinking and planning now.

“It’s really, really important that young people know these things at the beginning of their career,” business Professor Sylvia DeLeon said. “You don’t want to find out about it at age 50.”

DeLeon said one of the main things she teaches in BMGT 2383, Cooperative Education-Business Administration and Management, is not to accumulate debt.

Graduating with a bachelor’s degree and a $40,000 debt is not a good way to start.

“Try not to take out loans if at all possible; go with scholarships.”

When starting out in a career, young people should consider Social Security benefits, the retirement plan their employer provides and their own individual retirement account or an annuity, she said.

The first thing college students must do is find out if the industry they are going into provides a retirement plan.

She recommends young people go into industries that contribute to employees’ retirement.

If you’re in a field that doesn’t carry a retirement plan, create your own, she said.

The more an employer provides for you, the more money you will have set aside for retirement.

It is also important to understand the ratio, she said.

“If I put in a dollar, they’re (the employer) going to put in a dollar, that’s called a one-to-one ratio.”

Having a retirement pension plan and Social Security benefits is good, but it’s also a good idea to create an individual retirement account.

“It’s called diversifying your retirement plan. You’re diversifying in three sources,” DeLeon said.

If something goes wrong in one, the other two will still provide retirement funds.

Some people are living off only Social Security checks, which is an average of $1,269 a month, DeLeon said.

If you were born after 1967, full retirement benefits for Social Security start at age 67.

Congress has now been talking about increasing the minimum age for retirement to age 70.

“Start young,” she said. “The sooner, the better.”

For information on retirement planning, contact a financial planner or a bank.

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