Higher check payments become more than worth it
Your essay prompt did not mince words admitting the seeming absurdity of planning retirement while yet choosing a career. The amount of mutable variables remains immense, and it proves a daunting prospect struggling au courant the economic vernacular. But I'm learning.
Should I retain my health and interest in work, I will ideally retire at the ripe old age of 70. I can receive full benefits for Social Security at 67, but it is better to take advantage of the current bonus system. Social security checks currently increase 8% each year past full retirement age (for me, 67 years) with the cap at 70 years, so I stand to gain a 24% increase by working for three more years. (Spiegelman) Also, traditional IRA's and 401K plans require “minimum distributions” at 70 ½. (CNN Money) Ultimately, it becomes a gamble with my health. Should I live to 70, I would not be able spend any of my investment. Should I live to 90, the 24% higher check payments become more than worth it. Noting my grandparents 85th birthday, it is not unwise to be optimistic.
Following, based upon an estimate by the American Association of Retired Persons for what is required to generate $40,000 a year for a 30 year retirement, I will need 1.18 million dollars to retire.
How? My research stressed two themes: start early and be aware.
The Financial Mentor referenced a Harvard study that found the 3% of participants who had written retirement goals earned about 10 times the amount of the other 97%. Obviously going forward with a plan is a fundamental step. Also, the most powerful tool of investment, compounding interest, works best with time on its side: reiterating the need to start early.
Secondly, generally being aware of the means and regulations of investment is important. This was doubly impressed upon me by an attempt to impress the reader with a detailed figuring for the monthly contributions required towards an Arrowhead Credit Union Roth IRA to gain 1.18 million dollars; within a yearly budget of $43,700 (the average salary of Monterey TESOL graduates); with a 42 year career beginning after my 2019 graduation. However, the entire plan was thwarted by the Federal contribution cap and a low annual percentage yield. It is more complex than I hoped.