Retirement might seem like an unfortunately long amount of time off, but there’s no better time to prepare for your retirement future than the present. No matter your age or occupation, these saving tips and tools will see your financial status more secure by the time you reach retirement.
Determine How Much You’ll Need
For a while, the million dollar marker was a point most retirees worked towards, but these days, the amount you hope to save should be crafted around what you plan to do with your time once you are retired. Will you desire to travel? Do you have or are you hoping to have a large family with plenty of grandchildren to spoil? Will you move to a beach hut in Bora Bora? Considering exactly what you want to do will give you a better jumping off point of determining how much you need. If you need help figuring out how much money you’ll need to live the life you want, consult with a financial planner and estimate a solid number to work towards.
Start Saving Now
Even if you’re only in your first or second job and still have a long way to go in your career, it’s important to start saving as early as possible. The best strategy for bolstering a retirement account is starting as early as possible and remaining diligent with adding to it as the years go on. The longer there’s money in the account, the more compounded interest you’ll garner. If you find it hard to follow the discipline of contributing to a retirement account each month, put your savings on automation. This way, your money will go to the account before you even bat an eye.
Take Advantage of Free Money
If you contribute to a 401(k) but don’t take advantage of employer matching, you’re essentially throwing cash in the trash each year. You might be hesitant to take advantage, say, if your 401(k) requires you to deposit a higher threshold of money into the 401(k) each year, but by and large it’s worth it to cut your budget in other areas and sock away as much as possible—especially when there’s free money on the line.
Options Other than 401(k)
Perhaps your company doesn’t offer a 401(k), or you’re a self-employed individual. It’s important to look into IRAs, or individual retirement accounts. These might give you access to investment opportunities that a 401(0k) wouldn’t, like real estate investments, emerging market funds, and other financial options. You might also consider a Roth IRA, which provides tax-free growth and tax-free qualified withdrawals.
Budget Carefully
If you want to have more money to contribute into your retirement account but your salary isn’t going to experience an increase in the near future, you’ll need to figure out how to cut spending in your current habits. Sit down and look at where the bulk of your spending is allocated each month. Determine the expenditures that are frivolous and unnecessary, and allocate that into your saving efforts.
Reassess Your Tax Filings
Taxes are usually complicated, and throw in varied life events, changes in employment, and rising incomes, and you’re set to owe the government quite a bit of money each year. However, there are many lucrative but unfamiliar deductions and credits that you might be missing out on. Even if you think you’ve got a handle on your finances, it’s never a bad idea to consult with a tax professional. More often than not, individuals find they’ve been paying too much or missing out on credits that could have saved them hundreds if not thousands of dollars. Use a company like Community Tax and see if there’s anything you might have overlooked, especially if you’ve recently changed jobs, gotten married, or had a child.
It’s never too early to start building a retirement plan, and whether you’re in the beginning of your career or nearing the end, these tips will help bolster savings accounts dedicated to life after the professional sector.
About Carson Derrow
