By: Courtney Corbridge
Living in a condo, traveling the world, and filling your free time with family visits or time on the green seems like the dream of retirement. But not without a significant savings set aside.
Think of it. If you retire at 65, you’re looking at another 20 to 30 years of vibrant life, which means you’ll need the money to live it. In fact, experts say that you’ll have to save enough to practically replace your current annual income for each year of retirement. So if you’re making 50,000 dollars a year now, you’ll need 50,000 dollars a year then. The idea is that what you stop spending on your children’s education, mortgages, and middle-aged expenses you’ll make up for in new hobbies, healthcare, and excursions. On a 50,000 income, that’s 1.5 million dollars for 30 years.
But don’t get overwhelmed. Here are a few tips to help you plan now for a good life later:
1. Start Early: The US Department of Labor suggests actively saving 10–15 years before retirement. Other financial gurus recommend saving as soon as possible; the longer you save the more time your money has to grow on interest and in investments. Multi-millions will take some time, but don’t get overwhelmed, don’t give up, and once it’s saved, don’t touch it.
2. Stay Healthy: Certainly age comes with medical problems. We all slow down and break down a little, but the more we look after ourselves today, the less time we’ll spend paying hospital bills tomorrow—and the more likely we’ll be able to continue living independently on the funds we’ve saved. Keep a balanced diet and stay active.
3. Make a Budget and Keep It: Know where your money is going and cut down on unneeded expenses. It may surprise you what you can live without if you are actively concerned with your future.
4. Invest in Safe, Long-Term Investments and Spread Them Out: Experts caution against putting all your money in one or two places—especially in the companies you already get your paychecks from. Spread your money out so that if one investment suffers a loss, you haven’t lost everything.
5. Contribute to your Employer’s Retirement Fund: By putting away funds now with a 401(k), you can defer taxes until you make the withdrawal at retirement. By then your senior status may offer you tax breaks and benefits to help you save the maximum amount. Additionally, many employers will match your contributions or add a percentage of them to add to your retirement funds.
6. Minimize Expenses in the Last 10–15 Years: Pre-retirement is the time for stability. Try not to take out loans for cars or homes, and do not offer large loans to your children. This is the time to invest and save what you might otherwise offer up as monthly payments to a bank.
7. Research on Your Own: Whether that means researching which financial consultant will best be able to help you or researching which investments you want to make, knowledge is the key. So sit down with your spouse—or by yourself—and dig in.
Article sponsored by Morning Pointe.
Find them on the web at: http://www.morningpointe.com