For those who are in their 20s, there are a great many new responsibilities that you are likely faced with. In many cases, you are just starting out in the “real world.” This could mean obtaining a new job, possibly moving to a new city, and maybe even getting married and having children.
With all of the new responsibilities you are facing – or will soon have – it may be difficult to try and find any extra funds to start saving for retirement. After all – that’s a long way from now – right? Right…which is exactly the reason why you should be starting to save for it now!
Starting and Sticking With Good Investing Habits
It has often been said that bad habits are hard to break. So, one of the best ways to stay away from bad habits is to establish good habits instead. One of the best good habits that you can establish when you are young is that of saving for retirement.
One way to help you in establishing – and sticking with – your regular deposits to your retirement account is to sign up for your company’s 401(k) plan (if applicable). Not only will you be setting aside funds from your paycheck, but in many cases, employers will also match a certain percentage of the dollars that you deposit – essentially giving you free money.
If your company does not offer a retirement plan – or even if it does – you should also consider putting money aside each year into a Roth IRA. Although the money you deposit into a Roth IRA is “after tax” money, the funds that are in the account grow tax free. And, when it comes time to withdraw these dollars at retirement, they can be taken out tax free as well.
Time Is On Your Side
When you begin to invest early in life, time really is on your side. One of the biggest reasons for this is because the younger you are when you begin to save, the less you will likely need to set aside on a regular basis to end up with your ideal amount of savings.
Think about it like this. Even if you were receive absolutely no interest at all on your money, there is a huge difference between starting to save when you are age 25 versus even just starting out ten years later at age 35. For instance, if your goal is to build up a nest egg of $500,000 – and you started to save at age 25 – you will have 480 months (or 40 years) in which to make your deposit of approximately $1,042. Yet, if you wait until you are age 35 to begin saving, you lose 120 months, and will then need to make a deposit of nearly $1,400 per month just to reach the same goal!
Stay Out of Debt
Regardless of how well you are able to save, one of the biggest determents to your financial security is debt. Therefore, it is imperative to buy only what you can afford and keep the credit cards at home!
Oftentimes the lure of impulse purchases can be too much – especially when you can pay for it with credit. But don’t give in to the temptation – as it can negatively impact all of the other forward strides you have made towards your retirement savings nest egg.
George Gallagher is retirement, finance, and education blogger. He also works with graduates looking to find student loan consolidation through credit unions.
In today’s economy, finances, wages, and retirement are at the forefront of everyone’s mind. So much of our every day effort is put towards securing our own and our family’s financial well being. However, the turbulent waters unemployment, downsizing companies, and shrinking retirement pensions have created force us to nag constantly to ourselves about money and our impending financial futures. While at one time retirement was a moment for celebration and relaxation, today retirement has become somewhat of a headache for the average U.S. worker. Some employees are being forced to retire early, others are losing any chance of retirement at all, and retirement pensions are being pillaged by suffocating employers. While things are no doubt difficult today, there are several steps you can take to ensure that you make the best of your retirement situation when that time does come.
Do Plan Early and Ahead of Time
Procrastinating with your retirement planning is one of the most detrimental things you can do. As recent grads just entering the working world, there is nothing further from our minds than our retirement pensions and plans. Focusing on getting the job, making a salary, earning a promotion, and staying alive in the cutthroat world of “the really world”, new grads have enough on their minds without thinking about what their finances will be like when they are fifty. While it is understandable that youngsters don’t have their retirement on their minds, it’s not exactly wise. To make the most of your retirement situation you must plan ahead and start early. On top of paying of student loans and making rent, you should put some thought into your 401(k) plan. Retirement can be a stressful and nerve-racking time in any individual’s life. In order to properly prepare for your retirement you must be proactive. Educate yourself on your company’s retirement plan and invest into a 401(k) early.
Do Retire at the Right Time in Your Life
While this isn’t always completely up to you, many times a person will retire too early and miss out on a lot of financial opportunities available to them had they stayed at their job longer. After working the same job for more than a decade, retirement can be very alluring. However, you should always be very careful with when you decide to retire. There are several things that you will need to consider before you retire. One of the most prominent issues retiring early can present involves the cost of healthcare. If you are under the age of 65, healthcare costs can be a huge challenge without the support of employer based health insurance. Private health insurance tends to be a very expensive option (especially for someone who is no longer earning a regular income). So, if you do not qualify for Medicare and you do not have health insurance through your employer, you can to consider the costs of healthcare in your retirement. Furthermore, Social Security is another thing that you should take into account as an individual retiring before you turn 65. Individuals starting on Social Security before they are over the age of 65 will not receive its full benefits. Holding out on retiring until you can qualify for full Social Security benefits and Medicare may be a very wise decision to make.
Do Plan Your Post Retirement Budget
Planning for your retirement includes planning for after your retirement. As one might imagine, with retirement comes a new way of living. You will have to adjust your everyday routine to suit unemployment and you will have to alter the way in which you spend and use your money. Many times, people will retire from their salaried positions, but continue to manage their money as if they have that same salary coming in. Obviously, this can be a concern. Before retiring, consider your spending and finances. Explore your personal savings and the amount of money you will truly be receiving from your retirement plan. Develop a budget for your retired life that is reasonable in that it’s not too far off from your usual way of living, but that is also conducive to the amount of actually money you have to spend. This process can be tricky. Any adjusting period is going to be a struggle. If you are able to carefully plan ahead for your retirement, you can make this transition seamless and effortless. Forethought is the key to a stress-free and more manageable future.
Author Bio:
Stella Walker is a freelance writer of free credit score where she writes about topics including credit, debt, investment, bankruptcy.
Having a well-managed retirement plan is what each and every person should do. But then, how to save for your retirement when you are having enough trouble keeping up with your bills every month?
I believe this is the situation many, if not most, of us faces these days. With the uncertain economic outlook, retirement planning can be a little bit trivial. The question may of us ask to ourselves is: “How can I find enough money to safe for the future when today is already difficult enough?”
Take heed – here are a few suggestions you and I can benefit from to help our money-saving endeavors easier (although not that easy to achieve.)
First of all, to get things work out your way initially, you must have the willingness to make a few changes, especially in your mindset and financial policies. In fact, it all comes down to one, single big change you must make: making a commitment. Without a commitment – and the right financial planning to go along with such commitment – most likely nothing will never change, ever.
Here is what you should do. Make a commitment to yourself (or to your loved ones) that you shall do whatever it takes to change things for the better. Make a commitment that no matter what, you have to make your financial situation better.
For sure, the change wouldn’t happen overnight. So, give yourself a reasonable time frame through milestones and goals-setting to make it happen. Write down your commitment, and put it in your most-commonly visited place, e.g. your office desk, your bedroom, etc.
Next – get ready to make things happen! Here are some tips for saving money to get you started in your retirement planning; these tips will work wonders even when money is tight:
First, take some time to read your commitment each and every day. The more you believe in what you are committed to, the more you will be willing to take action and start seeing results.
Second, find and think of ways to make extra money. Here are some suggestions:
- start your own business
- sell stuffs around your house that you don’t need any more (tips: do a garage sale or sell them on eBay!)
- get a part-time job
- make money online (hot!)
Third, take out your checkbook and start writing down a list of your expenses for the last three months (or at least for the last month.) You have to write everything, as hidden things are often pile up quite a lot. Next, you must decide which expenses you can eliminate (I’ve warned you before – this won’t be easy!) You must also decide which ones of your expenses that can be reduced:
- cable TV
- cell phone
- internet service
- newspapers
- magazines
- entertainment
- eating out
- luxuries
- anything else you can live without
Be creative. Be honest. And be committed!
Last step – secure your excess cash in a place (e.g. bank account) that you know you would ‘kill’ yourself if you lay your hands on it.
To sum it all up – For your retirement planning, you need to be committed, follow the right money-saving strategy, and secure your excess money in an ‘untouched’ account. Repeat and rinse. You will soon see you are becoming a master of personal finance and will most likely build up a retirement fund in an amount that you are actually surprising yourself for being able to commit!
To note, your retirement account is not your investment account. Unlike what many think, your 401K plan and similar retirement plan is nothing more than an investment account (which means they follow how the money market moves.) Again, consider separating your retirement account with your ‘retirement’ account.
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