About 56 percent of Americans do not systematically prepare for retirement by investing, according to USA Today. Talk about living in a fantasy! You must invest now if you want to spend your golden
years with dignity.

When you are debt-free and have savings to cover emergencies, you are ready to start investing 15 percent of before-tax gross income annually toward retirement. If you invest more than 15 percent, you won’t have anything left over to save for college funding or to pay off your house. If you invest less, you won’t be ready for retirement.

I recommend growth-stock mutual funds for investing long-term. The stock market has averaged just below a 12 percent return on investment throughout its history. So, I select mutual funds that have had a good track record of winning for more than 5 years, but preferably for more than 10 years.

You’ve probably heard terms like 401(k), 403(b), IRA and SEPP used in reference to retirement savings. Those numbers and letters are just codes the government uses to designate what type of investment account you have.

A 401(k) is a great pretax, tax-deferred investment. That means your contribution goes in before you pay income tax on it and you don’t have to pay income tax until you withdraw the money from the retirement account at age 591?2. If your employer offers to match some or all of your contribution, then your first investment should be up to the amount of the match in your 401(k). A 403(b) is virtually the same as a 401(k) but it’s available for nonprofit organizations.

Start with a 401(k) if you get a match at work, and then fully fund Roth IRAs. The Roth IRA will allow you to invest up to $4,000 per year, per person. There are some limitations to income and situation, but most people can invest in a Roth IRA, and the great part is it grows tax-FREE. For those of you who are self-employed like me, the Simplified Employee Pension Plan (SEPP) is available. The SEPP is not simple, but you will prevail. Again, it is a tax-deductible, tax-deferred plan for small-business people to save money.

This is not a “get rich quick” plan. If you play with your retirement, investing by jumping in and out of the investments, then you are doomed to be still working past 65 years of age because you’re BROKE. Systematic, consistent investing is the tortoise that beats the hare in this race.
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Dave Ramsey’s financial advice appears every week in Quick & Simple. He is the host of the nationally syndicated radio program The Dave Ramsey Show and best-selling author of The Total Money Makeover and Financial Peace Revisited