Retirement, we’ve all imagined it—travel, leisure, relaxation. For most of us, retirement may be a long way off, however preparing for it needs to start as early as you possibly can. If not, you may find yourself in a position of financial insecurity during what should be your “golden years”. To avoid this from happening, here are some tips for you to consider putting into action now:
1. CALCULATE YOUR TARGET SAVINGS
It’s easier to work towards a goal that’s identifiable. Financial Planners recommend that you save between 10-15% of your income for retirement. However, everyone’s retirement plans differ, so use an online savings calculator to determine the amount YOU need to save for YOUR retirement goals.
2. CONTRIBUTE TO YOUR EMPLOYER’S RETIREMENT SAVINGS PLAN
If your employer offers a 401(k), traditional IRA or Roth IRA and you’re not signed up, DO IT NOW or AS SOON AS your employer allows you to! Set up automatic paycheck deductions— start small and increase the amount gradually. Chances are you won’t even miss it. Once the money is in your retirement fund, don’t touch it!
3. TAKE ADVANTAGE OF EMPLOYEE BENEFITS
Many employers offer matching which usually requires you to contribute a certain percentage of each of your paychecks and they will match that amount with money of their own. This is basically FREE money your employer is giving you just for contributing—if at all possible, try to put in at least the percentage that they match. Your employer may also offer health savings or flexible savings account. You contribute to these accounts with pre-tax money, meaning you reduce your taxable income amount which in turn allows you to save more money.
4. PAY OFF YOUR DEBTS
If you have debt, start by paying off any high interest credit cards first. Once that is done, take the monthly amount you were paying on those and apply it to any other debts, such as student loans and car payments until they’re paid off as well.
5. PAY OFF YOUR HOUSE
Adding a small amount to your monthly mortgage payment or making an additional 1 or 2 yearly payments will significantly reduce the number of years you’ll be paying on your home.
6. REDUCE DAILY SPENDING
Spending your money wisely now can make a huge impact later. Track ALL of your spending for a month—you will be surprised by the results. Taking a good hard look at your spending habits allows you to see exactly which areas you can cut back in.
Give yourself the peace of mind in knowing that you have a retirement plan in place. Trust me, you’ll be thanking yourself 25+ years from now.