INVESTING BEFORE AND AFTER RETIREMENT

1. When should I start to invest for retirement?
2. Don't give cash - Invest!
3. What if I've never been able to save?
4. Investing after retirement

1. When should I start to invest for retirement?

Now.

Every living person should have an IRA unless you are already rich. Educational IRA's for newborns make sense if you and spouse earn less than $100,000 a year. Roth IRAs are terrific for even your babysitting teenager. Profit Sharing Plans and 401K plans should be maximized if you fit the requirements.

Why? The compounding of investment return works so terrifically in your favor and the 30 some percent benefit of not being taxed on the profits until much later (or not at all with Roth) make that turn into big bucks over the years. For example, I watched someone dear to me put a few bucks a week into Johnson and Johnson stock over his lifetime and that is worth three quarter of a million dollars today.
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2. Don't give cash - Invest!

I say, do not give cash to loved ones. Give them appreciated stock you bought in the past. For example, my grandmother worked for a pharmaceutical firm and set aside a few dollars a week in the 1940's and 1950's to purchase well known company stock such as Eastman Kodak and Chase Manhattan Bank. Once she had a few shares she bought more shares through dividend reinvestment plans and added her small amounts of cash without any commission, purchasing directly with the companies. She had few choices in those days but today hundreds of firms permit that and some even let you start without owning shares. With the advent of discount brokers in recent years, the cost of selling a few shares is negligible so shares you accumulate can be "gifted" to your loved ones.
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3. What if I've never been able to save?

What if you've been unable to save a cent? You can create a form of self discipline with retirement savings by getting the minimum amount ($250) started and then automating payment from your checking account to a firm like Pax World Fund just by completing a simple form and copying a voided check. After that, even if you pay no attention to it, it should be growing for you. Oh yes, be sure to not put more than the annual maximum allowed by whatever retirement account you choose, most commonly, $2,000 a year. Take a look at the latest edition of J K Lasser's, Your Income Tax, for details.

I also recommend creating a reverse budget. The reverse budget permits you to refine your sense of what you need. It's simplicity lets you master this aspect of your life.
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4. Investing after retirement

Who we are or what we've done is fairly constant in later life. If you know yourself, then you probably know your comfort (or joy) with risk. You are also old enough to have seen that historically, inflation creates risk for those who fail to invest.

Investment after retirement should be enjoyable. If you like to take time to read, subscribe to a good publication.

To retirees I say, if you have never invested before, don't start now. Get someone you trust to go over your money needs.
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