Get Paid to Save With Your Employer
Many employers today offer a retirement savings plan like a 401k or a 403b where you may contribute a portion of your paycheck to go towards your retirement savings.
This not only helps you start saving for the future, but employers may even match a percentage of your contribution. It’s literally free money for investing towards your future. Take advantage of this benefit if your employer offers it. It also uses pre-tax dollars.
Review Your Investments
In addition to a 401k plan with your employer, you can contribute to retirement through a traditional IRA and Roth IRA. There is a limit on how much may be contributed towards these plans each year depending on your income.
Invest wisely by diversifying your portfolio. Don't put all your eggs in one basket. These investments also require periodic review. As you near retirement, consider investments with less risk. A financial advisor may help construct a financial plan to help you achieve your financial goals for retirement.
Budget for Your Retirement
How much you need to put away for retirement depends on the type of lifestyle you want to live. The factor is that on average Americans spend about 20 years in retirement, but the longer period of retirement you can plan for the more comfortable you'll be financial.
If you want to maintain your existing lifestyle after retirement, you'll need about 70-90% of your pre-retirement income.
Reduce/Eliminate Debt
Entering retirement often means less income. The more debt-free you are, the less there is to worry about finding income to cover for that expense. Consider what you have and what you may want to offload. Do you have two cars, but only need one during retirement?
Are you an empty nester and don't need a home with as many bedrooms? These are all considerations to help reduce and offload unnecessary expenses. The more you can clear out debt before retiring, the easier it’ll be for you financially.
Determine Your Retirement Age
Consider how long you will be working. Are you planning to take Social Security when you reach full retirement age? Taking it earlier can mean a reduction in your benefits, so the longer you can hold out until full retirement age the more benefits from Social Security.
It's never too early to start thinking and planning for your retirement! For some, a financial advisor may be necessary to help ensure the right financial path to retirement.
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