Retirement is not too far off, even if you’re in your 20s. Before you know it, you’ll be celebrating your 65th birthday. If you have good retirement savings, you’ll be pretty happy about this milestone. If not, you’ll be stricken with fear. The following are some steps to improve your retirement savings.
Step #1: Come Up with a Plan
You won’t be able to save the amount you want to save if you don’t have a plan. Usually, people want to keep the same lifestyle they lived when they were working, so being able to have enough money to afford everything you can now is important. Come up with a monthly amount you will need in retirement, and then multiple it by 12. You will then know how much you will need for a year. You can then give yourself at least 20 years before you die, so take the yearly amount and multiple it by 20.
You will then have to determine how much you need to save each month to achieve your goal. Saving money isn’t all you need to do, though. There are some ways to make more money from the money you’re saving.
Step #2: Learn About Investments
Money makes money when you invest it. There are many investment options for people who are looking to build their retirement savings. These investments are usually long-term and aggressive because there’s a lot of time to recoup any loses. If you are lucky, you won’t have many loses and you’ll end up way ahead of your goal.
Step #3: Find a Financial Planner
A financial planner is a great partner in getting your retirement savings up to the amount you want it to be now and in the future. He can review how much you’ve saved, how much you should save, and inform you of investment opportunities that will help you make the most from your money.
There are many financial planners available. Shop around before you decide on one. Some of them specialize in debt counseling, others in budgeting, and then some in retirement and investing. Find someone who can help you with retirement, budgeting and investments.
Step #4: Follow Through with the Plan
Once you have a plan created by you and your financial planner, you will have to follow through with it. There’s no point to having one if you don’t use it, right?
Get yourself into the habit of reviewing your plan each week or monthly. This way you can see how possible your goals are, and adjust them accordingly.
A good idea is to automate your savings. Each month, have a certain amount of money taken out of your account for your retirement. This will keep you from caving into your cravings to use it on frivolous purchases.
Step #5: Find More Ways to Contribute to Your Retirement Savings
Many employers offer 401(K) plans, and they will sometimes match contribution up to 5%. It’s worth it to take advantage of this opportunity because it could significantly add money to your retirement savings.
Step #6: Open Up an IRA
There are two IRAs you can use to save for retirement. There’s the Traditional IRA and the Roth IRA. Many people decide to get a Roth IRA because the money that goes into it is taxed beforehand, while the Traditional IRA money is taxed when you take it out at retirement. Many people do not like to have to spend thousands of dollars to receive their retirement savings.
Step #7: Delay Your Social Security
Did you know that if you delay your social security payments to 70, you end up receiving more money per month? If you can wait, do it because you’ll be much happier with the monthly income this way.
The most important thing to do now is to come up with the goal. You can then work on a budget to start saving money. Once you have these two steps covered, bring in a financial advisor to learn how you can make more money with your savings through investments. You can bring in a few different ways to increase the amount of money you can make such as through 401(K) plans with employer contributions, Traditional or Roth IRA accounts, and delaying social security.
By being diligent with your retirement savings now, you’ll be much happier when it comes time to retire. Get started today.