The Pandemic Recession Won't Kill Your Retirement Plan -- But Here's What Will
Catastrophic thoughts about the future of our global economy have stood tall in the minds of most throughout the past six months -- and with good reason. Amidst great political uncertainty, social discord, and widespread economic strife, many people have felt that their chances of ever retiring are becoming slimmer by the day. It's now as important as ever to return to the basics of what actually will impact your odds of a financially successful retirement. Below, we explore five behaviors that are far more likely to impact your long-term success than the current recession.
One of the keys to understanding the benefits of compound interest is to first realize that money saved in the earliest stages of your career will provide the most benefit when it comes time to retire. Contributing to your employer's 401(k) plan, at least up to the employer match, is a non-negotiable. Contributing the annual maximum -- currently $6,000 -- to your Roth IRA as early on in the year as possible (or a backdoor Roth IRA if you are not within the income limits) should be considered an emergency. Taking advantage of these two core retirement practices every year -- and only these -- will ensure you're capitalizing on favorable investment growth and tax treatment for as long as you possibly can.
It's well established that obsessively following every tick up or down is more likely to harm your investment performance than it is to improve it. What is critical to your success, however, is to determine an appropriate asset allocation (the relative proportions of money held in stocks and other assets) and continuously add to it -- regardless of what is happening in the market.
Source Fool.com