There are lots of people that live paycheck to paycheck. This has created a huge shortfall when it comes to saving for retirement. A third of those who live in the US haven’t even started to save for retirement. Another third have less than $1000 set aside in their retirement accounts. These statistics even apply to older adults that are nearing retirement age. It isn’t too late to start saving for retirement.
Here are some things that everyone should do in order to prepare.
Experts say that you should have a substantial amount of money set aside by the time you’re fifty years old. This provides you with a cushion in order to be able to retire. How you get there is up to you, but there are proven ways which help make it easier.
The road to substantial retirement savings begins with preparation. A part of preparing is to start your retirement planning early. Consider looking into retirement planning courses to improve your understanding.
Take advantage of 401k offerings from your employer. Some employers will match your contributions up to a set amount. This is money that they’re giving you just for saving for retirement.
There are other types of accounts in which you can invest your money for retirement. IRAs and Roth IRAs are something that you should take into consideration. With a traditional IRA, you can put money directly into it without having to pay taxes. You pay the taxes when you pull the money out of the account. With a Roth IRA, you pay the taxes upfront. You can take the money out at retirement without having to pay taxes.
Having a savings account provides you with a buffer for those unexpected expenses. Many Americans don’t have any money in savings. This is a mistake. Having retirement savings is a good way to set yourself up for the future. Build up this emergency fund for any unforeseen expenses. Americans that participated in a retirement savings survey stated that their greatest mistake was not starting early enough. It is never too early to start thinking about your retirement options.
Don’t look at saving for retirement as being optional. Unless you have a good job that provides you with a pension, you’re on your own. This is why it is easier to start out by having the money taken directly out of your paycheck. You can adjust your monthly expenses as needed. Over time, you won’t even miss that money. This is setting you up to have a nice reserve when you decide to retire. Reduce your monthly expenses and save that extra money each month. This will allow you to build up your emergency fund.
Open up an account with a brokerage fund. Select a firm with the level of involvement that you have in mind. Decide whether you want someone else to manage your money, or if you want a more hands-on approach. Start out small each month. Even $20 a month can help you realize your goal. Add more money as you get older. You want your money to work for you. Look into funds that are aggressive. Reduce the riskiness of the funds as you age. You want to have more stable funds when you’re nearing retirement age.
As you near retirement age, your monthly expenses should be decreasing. Take this extra income and invest more of it. You don’t want to run out of retirement money before the end of your life. Use a cost projection to determine how much money you will need to have saved. Work toward this goal. You want to be able to live out your retirement in relative comfort.