Bridging the Gap
Between now and your retirement date, you should aim to save and invest so that you can bridge the gap between your retirement needs and your targeted retirement nest egg. To begin, you must start saving now.
You have probably heard the adage, "Pay yourself first." Each month, as you pay your bills you should also write a check to your retirement savings account, no matter how small at first. What is important is building the savings habit. The easiest way may be to have an amount automatically deducted from your paycheck and deposited into a savings account specifically earmarked for retirement. This account should be kept separate from other savings accounts, e.g. any you've set up for the children's education or for vacations. Then periodically the savings should be invested in places that will earn a good return.
A problem that many people have is that while they may save, they don't invest. Leaving your money in a passbook account earning 3 percent while inflation is 4 percent means that your principal is actually shrinking. You need to deploy your funds into investments that will earn enough to beat inflation, pay any taxes on their earnings, and still grow and multiply.
See planning to reach your goals for a more detailed discussion of a process for setting and achieving financial goals (such as retirement).
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