What’s your dream retirement? Lounging on the beach? Travelling around the world? Owning a nice home for your grandchildren to visit? No matter what you plan on doing in retirement, you can put yourself in a good financial position by following any of these five tips.
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1. Start Saving
The best way to finance your retirement is to put money away in savings. Saving money is one of the most difficult aspects of managing your personal finances, but it’s important if you want to have enough money to enjoy life while you’re not receiving a paycheck. You don’t want to be house poor because your retirement funds only cover your basic living expenses.
The key to saving money for retirement is that you’ve got to put money away consistently. Ideally, you’d make a small retirement contribution every paycheck. In order to do that, you should abide by a monthly budget. Keep track of your monthly expenses and use a portion of what you have left over for savings contributions.
You should make sure that you’re using the right kind of savings account to hold your retirement funds. A regular savings account doesn’t yield very much interest. Furthermore, it’s easy to take money out of a regular savings account. Consider opening an IRA account, instead, which yields a higher amount of interest and prevents you from transferring your funds.
2. Get Investing
One of the best ways to fund your retirement is to develop a passive income. A passive income is any kind of income that you don’t have to actively work for. It’s a great way to supplement your retirement funds.
Stocks and bonds provide some of the best investing opportunities. When you buy a stock, you’re essentially buying a piece of company, and you’ll be rewarded with a small share of the company’s profits. The more stocks you own in a company, the higher your dividends will be—so long as the company is doing well. Bonds are similar, but they’re issued by the government to fund federal programs, and you’ll be paid back the full you paid, plus interest.
Success in the stock market requires patience. Don’t panic when the stock price falls for a company you have ownership in—hold onto your shares for as long as possible and trust that the price will rebound. That being said, do research on a company before you buy shares so you’ll have an idea of whether or not they’re going to truly grow and become more profitable in the future. Also, use your initial dividends to buy even more stock in the company so that your dividends will grow over time.
3. Invest in Property
Real estate is a great asset to invest in because most properties grow in value over time. If you hold onto a property for a long time, there’s a high likelihood you’ll be able to sell it for more than you bought it for.
Whether or not you’re already a homeowner, consider purchasing an “investment property.” You could rent out the property to tenants and make extra money for retirement contributions. When you’re ready to retire, you could sell the home and use the cash for your retirement funds, which should be a pretty substantial amount of money. Consider getting government-secured loans so you can try and get lower mortgage costs.
4. Sell A Company
You’re an entrepreneur, so there’s a good chance that you plan on starting up one or more businesses throughout your career, if you’re not a business owner already. Question: if you plan on retiring, then who’s going to run your business while you’re off golfing at the country club? Answer: whoever’s willing to pay you for your company. Selling one or all of your companies is a terrific way to earn your retirement funds.
You can also sell parts of your business, like a brand or department that’s doing very well. Sometimes, there are buyers who are just looking for a good website. If your company has a website with a strong design and lots of high-quality content, you might be able to dispose of it for cash.
5. Get a Reverse Mortgage
Last, but not lease, there’s the reverse mortgage. A reverse mortgage is a good way to gain extra income during your retirement. How does a reverse mortgage work? Basically, you give up some equity in your home in exchange for a monthly paycheck (so instead of paying a mortgage payment, you’re receiving a mortgage payment).
A reverse mortgage may be a great option for you so long as you don’t intend on passing on your home to any family members—your family members may have to pay back the equity that’s been removed from the home, or sell the home to recoup the funds. If you plan on leaving the property to family members, just be sure that you speak with them about it beforehand and make sure they’ll be financially prepared.
Your dream retirement doesn’t have to be a dream at all! Just follow these five tips to help you save.
About Carson Derrow
