Long-Term Goals

Saving for something more than 10 years away.

Long-term goals have a timeframe of more than ten years. The main long-term goals you probably have are saving for retirement and saving to send kids to college. (We’re assuming here that that the thing you’re saving for is pretty expensive, too. If you’re saving to have one really great deep dish pizza on a trip to Chicago 25 years from now, you could probably just put $100 in a drawer and be okay, even considering inflation.)

Where to invest for the long-term.

When you’re setting aside money for retirement or college, you need to put that money somewhere that will earn as much interest as possible. And since you have a longer timeframe, you can afford to take on a little more risk knowing that, despite the ups and downs of the market, you should come out okay in the long run. Your primary choices are going to be IRAs and 529 plans.

• IRAs, or individual retirement accounts, are personal retirement savings plans. You contribute annually -- although that’s not required and there are no minimums you must contribute -- and your earnings aren’t taxed until they’re withdrawn. (And with a Roth IRA, withdrawals may even be tax-free.)
• 529 plans are education savings plans operated by a state or educational institution to help you set aside money for future college costs. Some work like IRAs, where you invest your contributions in mutual funds; others are prepaid plans where you pre-pay the cost of an in-state public college.

Strategies for saving in the long-term.

When you’re saving for the long-term, the more you set aside, the better off you’ll be. This is especially true for retirement. The rule of thumb is that, if you’re in your 20s and just starting to save for retirement, you should save 10% to 15% of your salary each year. If you’re getting started in your 30s, you need 15% to 25%. And if you waited until your 40s, you’ll need to sock away 25% to 35% of your salary if you want to keep your standard of living. So start NOW.

Sign Up.

Saving is easier with Mint.com. Track your spending and use our budgeting tools to make saving a snap.

Want to learn more? See our pages on Short-Term, Mid-Term and Long-Term plans for saving.