While retirement may seem too far in the future to worry about or too soon to prepare, it’s never the wrong time to make proactive decisions toward retirement. It’s best to start saving for retirement as early as possible. There are specific steps you can take to increase your retirement savings at any stage of your life. Putting in the work now will allow you to rest and relax the way you deserve later. If you want to have a stable future, take a look at our five tips for saving for retirement.
1. Start Now
If you’ve just started to put money away for retirement, make an effort to save up as much as you can. Through compound interest, your current assets can generate earnings, making your money is work for itself. We also recommend that you set up an emergency fund. On the off chance that you lose a job or have a medical emergency, you can dip into the emergency fund, avoiding the risk of taking out a loan or maxing out a credit card. A reasonable goal for your emergency fund is around three to six months’ worth of living expenses. When you’re saving, go easy on yourself at first. Start small, and then increase your deposits according to your monthly expenses and income.
2. Contribute to Your 401k
Our second tip for saving for retirement is contributing to your 401k if you have one. Some companies offer a 401k plan to their employees. If your company offers it, you should see if you can contribute pre-tax money to give you a significant advantage toward your retirement savings. You’ll be able to invest more of your income without it making a drastic change in your monthly budget. There are several different rules and regulations for a 401k, depending on the company and your current situation. Avoid any penalty fees or misinformation by doing your research beforehand and having an understanding of your company’s 401k plan.
3. Delay Social Security
Did you know that, for every year you delay receiving social security before the age of 70, you increase the amount you receive in the future? If you choose to wait from the age of 62 until 70, your monthly benefit will increase. If you don’t want to wait that long, just waiting a year or two will make a drastic difference. In addition, waiting can increase the potential future survivor benefits for your spouse. It’s never too late to make positive steps toward increasing your retirement savings. Even at the age of 62, you can make small steps that lead to a large reward.
4. Consider Health Care Costs
Many times, you can’t plan for the emergencies that happen in life. However, you can prepare yourself for them just in case. As you age, your health could be a risk the older you get. Medicare is great, but it doesn’t cover long-term care needs unless you require skilled nursing care. When you’re in your 50s, you want to take advantage of purchasing a long-term care policy to get the best rates possible. In addition to buying a long-term care plan, you’ll also want to consider a health savings account. There are opportunities to save and invest in HSAs for future and current medical expenses. By selecting a high-deductible health plan, your contributions towards HSAs are made pre-tax, investments grow tax-deferred, and your balance can roll over from year to year.
5. Open an IRA
Our last tip for saving for retirement is to open up an IRA. By establishing an individual retirement account, you’re making one big step towards your future. There are two main IRAs that you can select. One of them is a traditional IRA, which may be the best option for you, depending on your income and workplace retirement plan. A Roth IRA is an excellent choice if you’ve met the phase-out income limits, which are based on your federal tax filing status.
Filing for an IRA can be intimidating and confusing, so we recommend meeting with one of our experienced IRA custodians and providers equipped with the professional knowledge and resources necessary to help you get on the right track for retirement. For any additional questions or concerns, visit our website. Retirement is just another part of life, and the sooner you start preparing, the better; in other words, don’t put it on the proverbial back burner. Instead, envision your ideal retired lifestyle, and then start taking action steps toward it.