Failing to save for your retirement is essentially failing to plan for your future. You are neglecting taking care of your older self. Before you plan anything like vacations or children’s education, you must save for retirement first. The earlier you start, the less problems you will have in the future. Following are some tips to help you save for your retirement.
- Come up with a plan.
Relying on Social Security is not a plan. The easiest step to take is taking advantage of any retirement plan offered by your employer. You can just transfer money into these accounts with every paycheck. Check out your 401(k) or IRA options and make payments automatic to stay on track.
- Add retirement savings to your budget.
According to experts, you must save 15% of your gross salary for retirement annually. If this is too much, start to save what you can afford today and make a plan to reach 15%. Save any extra money you have and put all pay increases towards reaching your retirement goals.
- Aim for certain milestones.
Keep your savings on track by measuring your progress against benchmarks at certain ages. You can aim to save one year’s worth of salary by age 30, three years’ worth by 40, six years’ worth by 50, and 10 times your annual salary by 67.
- Understand your retirement accounts.
A 401(k) is essentially offered by employers to help their employees prepare for retirement. You can also invest in other things, especially when you are young. Be aggressive with your investments early and be conservative as you come closer to your retirement age.
- Adjust your retirement strategy as necessary.
In your 20s, it makes sense to implement an aggressive approach to investing in stocks since you have time to even out any market fluctuations even time. As you get closer to retirement, switch to different tools that carry less risk. Life expectancy is increasing and you do not want to have more life than money. Alternatively, you can also consider taking part-time jobs, even temporarily, to have a continuous income stream throughout your retirement.