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Saving for your retirement is a daunting task for just about anyone. Knowing how much to put away and where to invest your money is something that isn’t common knowledge for most people. However, by applying a few simple tips and starting early, you’ll keep your mind at ease and enjoy the relaxation that is a proper retirement.
Use Your 401(k) Savings Plan
Most employers offer a 401(k) savings plan to their employees, but many don’t take the time to inform or encourage their employees to use it. With both a traditional and Roth 401(k), money is taken out of your paycheck at a percentage you choose. The difference is that the traditional plan takes the money before you pay taxes on it, and the Roth takes it after taxes. The money is then invested in various bonds, stocks, and mutual funds. Often, employers match the amount you put in, giving you free money in the process. If you’re unsure where to begin, check out this handy guide to get started.
Track Your Progress With Apps
It’s not easy to track all your various investments (IRA, 401(k), stocks, bonds, etc.) because they are usually on several different websites, and sometimes the numbers mean nothing for the finance-illiterate. To easily maintain and track these funds, try using apps such as CNNMoney Portfolio or SigFig Investment Optimizer. These apps sync all your accounts together in one place, making tracking a breeze. The Samsung Galaxy Note 4 with its 5.7-inch screen is perfect for displaying figures. You already use your smartphone for just about everything else, so including your retirement tracking apps into the picture is a no-brainer.
Start Early
Starting early for retirement is one of the toughest tasks to accomplish. Most people start families early on, so buying a new house or new car is important. Even bachelors and bachelorettes find saving difficult, as each wants a nice sports car, apartment, or the latest gadget. However, the difference between starting early and waiting several years is drastic. If you save $5,000 a year for five years with seven percent interest, you’ll have a little over $30,000. However, if you keep that savings going for 30 years, you’ll end up with nearly $700,000, which is a stark contrast.
The key is to set your goals at realistic expectations. If you can only put $50 a week in the bank, start there and contribute more as your salary increases.
Make a Budget
If you’re not money-savvy, your earnings go out the window, while you hardly even notice. To combat the urge to spend frivolously, create a budget. At first, just do one month, then check out the results. You might be surprised to see how much money you spend on drinks at a bar, dining out, or other miscellaneous expenses. Once you have an idea of your spending, cut the budget down. You’ll thank yourself later.
Pay Off Credit Cards
Saving money doesn’t do much good if you have $10,000 racked up in credit card debt. While you should still save some of your income, take the extra money and start paying down your credit cards. Not only will this raise your credit rating, helping you with large purchases in the future, but it will save you from paying additional interest.
Consult a Financial Planner
Don’t be afraid or shy when it comes to consulting a professional. These individuals make their living based on your accumulating more wealth, and most of them have your best interests at heart. If you’re unsure where to invest or how much savings you need to live comfortably, set up a meeting. Many financial planners will even meet with you initially at no charge to discuss your concerns. It’s a resource that’s often underutilized by people looking to save money.
Be Smart
Many people have lost money by making poor investment choices. Don’t be one of them. If something seems too good to be true, it probably is. Also, be wary of loaning money to friends or family, although it may seem like the right thing to do. Remember, a fool and his money are soon parted.
Retirement isn’t something to stress about, but rather, a time to enjoy the fruits of your labor. It’s a time for experiencing some of the things you’ve missed and for spending time with loved ones. The sooner you get your financial affairs in order, the sooner you’ll have time to do everything you’ve always wanted.
7 Useful Tips to Help You Save for Retirement !
I think the overlooked item with 401ks is the companies match, Take full advantage of the free money if your company offers it. Don't let the thought of retirement saving / investing overwhelm you. There is a lot of information available online or via books. If all else fails ask for help.
Yes Brian that is a great point, the matching will help people save more. If you’re employer doesn’t match take your talents someplace else.
Starting early is a great tip. At first, it doesn't feel like much but compounding really works it's magic. People who don't even contribute to the match in their 401k are giving away free money. As for a financial planner, I have never used one but it may be right for some. Personally, I think it's important to find a fee based financial planner…I think they will more likely have your best interests. If a planner works for commission and is trying to sell certain products, there is definitely a big conflict there.
Definitely take advantage of company matching if there's such offer from your company. Starting early is so crucial.
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That’s a good one tawcan, so many people leave this free money option off the table. Free money is the best.
I agree that starting early is the way to go when it comes to preparing for retirement. There are too many people who find themselves already ready to retire when they finally start thinking about preparing for it. As a result, they only retire for a few years before they realize they are out of money and have to go back to work.
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Starting early is definitely the hardest thing when it comes to planning for retirement. It still seems so far away, I have a hard time thinking it's worth it. However, seeing that how saving $5,000 a year can save $700,000, I think I'll start!
My husband and I just got married and we're already starting to talk about retirement. We understand that we won't be able to retire for a while, but I think that saving for it is very important. I'm not sure if we're able to save $5,000 right now, but I think that we should come up with a goal to save a certain amount every year and increase that amount as more money becomes available to us.
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Hi,
I really like your post..
Good advice. I should pay it more mind myself. One tidbit I like to pass on to my clients is to planning for future housing. Having a budget to allow you to get saving is a great first step. Once you are in the swing of saving the right amount for your life circumstances it then becomes important to consider what you are investing in.
Thanks for sharing..
Regards
Lyle L. Ketner
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I love your point about how you’ll end up with nearly $700,000 with seven percent interest if you’re putting away $5,000 a year. My husband and I would love to start investing early for our retirement. We are both working, so it would make sense for us to start putting money away. We’d probably want to speak with a financial adviser for help. It seems like there’s a lot to know and do.
I liked that you pointed out that you should start planning for retirement early on. That is a good thing to be aware of when you get successful early on in life. It does seem like a good thing for a professional athlete to know.