Many young people and even some older people put off saving for retirement until it is too late. They may feel that they have nothing but time and that retirement is something that is far away.
Retirement should not be something that sneaks up on a person, though. Instead, it should be methodically planned and prepared for.
If you feel that you are not properly saving for retirement, now is the time to start. Consider these tips for being on your way to successful retirement planning.
1. Start Today
You can never start saving for retirement too early. If you do not already have a dedicated account for retirement savings contribution credit, now is the time to make one.
There are many types of accounts available for every need, but the important thing is that you start saving right away.
Every situation is different, but according to CNN, you should be saving 10-15% of every paycheck for retirement.
This can seem like a large chunk of your earnings, but you will hopefully be retired for a long time. The more you save now, the sooner you can retire.
2. Determine How Much Retirement Money You Need
It is wise to talk to a financial planner to find out how much money you need for retirement.
You should consider at what age you wish to retire, your current age, your family size and your income. Other factors such as whether you own or rent your dwelling will also come into play.
You must also consider if you are saving for your spouse’s retirement as well.
If he or she does not work or does not have a separate retirement account, you will need to contribute double the amount that a single person would.
3. Invest Your Money
The stock market can be a confusing thing for many people, but fortunately there are financial advisors and planners who understand it very well.
Money that you invest now is constantly growing for your retirement years. Investing in the stock market should not be seen as a get-rich-quick scheme; instead, it is a way to store up for the future. There are many types of investment accounts available, and it is important that you understand the basic types.
You will likely hear the term “diversify” when speaking with a financial planner; this simply means that you should spread your investments across multiple industries.
4. Eliminate Unnecessary Expenses
If you are wasting your paycheck on unnecessary expenses every week, you will have little to save for retirement.
It can be easy to let small things slip through the cracks, but these little purchases add up over time. If you have not already, sit down and track what you spent last month. See if there were any purchases that were not wise.
While you will and should spend money on things you enjoy from time to time, you need a budget that accounts for your savings and retirement planning first.
5. Adjust as Needed
There is no perfect formula for retirement planning, and as your situation changes, you will need to reevaluate your financial standing.
If you change jobs, get married, have children or buy a house, there will be changes to your financial portfolio. It is important that you track these changes and adjust your plans as needed. To some extent, a retirement plan must be flexible.
The important thing is that you are contributing enough and that you are making smart spending decisions.
If you have been putting off planning for retirement, now is the time to get started. It is not something that should be put off until the last minute; instead, it takes years of careful planning and research.
Consider speaking with a financial advisor today to get an overview of your situation and see where improvements need to be made. You will thank yourself when you are able to retire comfortably.
Author: Kevin Devoto