After graduating from school, somewhere down the road comes a career and even further down the road comes retirement, and with that comes both the perks and the responsibility.
Before retirement, plans such as the 401(k) and Individual Retirement Arrangements are offered through some employers.
A 401(k) is a plan in which employees contribute a portion of income to their accounts, and an IRA is when the employee has money deducted from his or her paycheck to save up for retirement.
Stephen Christie, assistant professor of accounting and finance, said the current generation is able to start collecting Social Security after about 45 years of working.
“The benefit of that is you’ll have had lots of time to build up funds to be used in your next phase of your life,” Christie said.
According to DOL.gov, a site known for occupational safety, wage and hour standards, unemployment insurance benefits and re-employment services have calculated how much they need to save up for retirement and that the average American spends about 20 years in retirement.
“Start young, and over time, the interest that you earn or the earn that you return then compounds interest on itself,” Christie said. “The returns beget more return in addition to the money that you begin to put away.”
Christie said that for retirement, students should set up direct deposit to their savings account to have money taken out of their check to begin a regular savings process.
James Riccio, freshman pre-nursing major, said his plans for retirement are to save up his income earned from his career after he graduates from school.
“I also have a certificate of deposit that allows you to put money into it and over time, it builds up interest, and you can’t touch the money for up to 15 years,” Riccio said.
A CD is a type of deposit with a bank that offers a higher rate of interest than a typical savings account.
“For a retirement vehicle, it really does not work (as a retirement plan) because the term of a CD is too short, relative to the retirement time frame for students–upward of 40 plus years,” Christie said. “(The certificate of deposit) is, with that being said, a relatively safe investment.”