If you plan on retiring someday, you’ll need money to do so. Unfortunately, most Americans put off planning for their future, and therefore end up working well into their golden years. If you prefer the idea of relaxing with your grandchildren to spending your old age working a retail job to cover the bills, we can help.
Know Your Retirement Needs
Spend some time calculating how much money you think you’ll need coming in each month after retirement. Will you be remaining in your current residence? Should you set aside money to move into a skilled care facility? Do you have any type of illness that will worsen with age? If you’re unsure how much money you’ll need during your retirement years, it may be wise to speak with a financial planner. They can help you come up with a target amount, so that you’ll know how much you should be saving each year.
Start Saving, and Save Regularly
No matter how much (or how little) you make each year, there’s never been a better time to start saving for your future. Your retirement accounts won’t grow on their own, so start contributing today and make it a priority to contribute on a regular basis. Once you’ve done so for a few months, it will become a habit and you won’t miss the money from your budget, but you’ll certainly notice its presence (or absence!) after retirement.
Contribute the Max
If you have a 401(K) through your employer, be sure to contribute each year. If your employer matches your contributions, do your best to contribute the maximum amount allowed. An employer-matched 401(K) allows you to double your money for free. It doesn’t get much better than that.
Learn About Social Security
Before you mentally brush off the idea of retirement savings by planning to rely on the Social Security program, spend some time researching to learn how much you’ll actually receive. Most Americans are unable to live on the benefits received from Social Security alone. You receive a summary each year by mail that describes your contributions to the program and what you can expect to receive each month after retirement. Pay careful attention to this document. It will help you determine how much more you’ll need to contribute to a savings plan in order to live well after retirement.
Put Money Into an IRA
After you’ve maxed out your 401(K), consider investing in a traditional or Roth IRA. These savings plans allow you tax benefits for saving money, and let you set aside up to $5,000 a year for retirement. An IRA is an excellent way to supplement your 401(K) savings and other investments.
Get Started as Soon as Possible
No matter how young (or old) you are, it’s essential that you start saving as soon as possible, and continue to contribute to your retirement fund on a regular basis. Far too often, we put off our future needs as we take care of the more urgent daily needs. Unfortunately, however, the future comes more quickly than we’d like. Plan today for how you’ll be living after retirement, so that you’re not caught in a bind later in life.
Planning for your retirement is an essential part of money management that far too many Americans neglect. Spend some time today evaluating your financial situation and decide how you’ll handle this important issue.