Ways to Save Money for your Retirement
Retirement is expensive. To maintain your
standard of living when you stop working, it is estimated that you will need at
least 100 percent of your pre-retirement income with inflation or more.
Retirement planning is about managing your money today so that you can make the
most of your retirement period. Your retirement plan should balance your needs,
wants and the reality of your finances. So take charge of your financial
future. The key to a secure retirement is to plan ahead for your retirement.
A strategy for how you save today can make a big
difference in how much money you will have after your retirement. A solid
retirement saving plan charts out methods of creating retirement income and
creates a roadmap to help ensure that your money will last as long as you do.
To start with these are the ways to save money
for your retirement-
Have a saving mindset
You should designate an amount of your pretax
income to contribute to your retirement savings on a monthly or bi-weekly basis
and have it taken out of your salary, just like your taxes. It's easiest
to save money when you don't have it in your hands; you're effectively taking
the decision of whether to save that money out of your control.
Start saving, keep saving, and stick to your
goals
If you are already saving, whether for
retirement or another goal, keep going! You know that saving is a rewarding
habit. If you're not saving, it's time to get started. Start small if you have
to and try to increase the amount you save each month. The sooner you start
saving, the more time your money has to. Make saving for retirement a priority.
Devise a plan, stick to it, and set goals. Remember, it's never too early or
too late to start saving money.
Cut your unnecessary expanses
Usually when we are working and earning good
money we tend to indulge in purchase of goods and luxuries which may not have a
long term use. Therefore it is necessary to assess before buying anything
whether you will actually need it. This way not unnecessary expenditure can be curtailed
but also it will contribute to your savings for your planned goals.
Put money into an individual retirement plan
You can put up to 5000 a year into an Individual
Retirement Plan; you can contribute even more if you are 50 or older. You can
also start with much less. IRPs also provide tax advantages. The tax treatment
of your contributions and withdrawals will depend on which option you select.
IRAs can provide an easy way to save. You can set it up so that an amount is
automatically deducted from your savings account and deposited in the
Individual Pension Plan.
Investment in stocks is best for long-term growth
Stocks have the best chance of achieving high
returns over long periods. A healthy dose will help ensure that your savings
grows faster than inflation, increasing the purchasing power of your nest egg.
Contribute in employer’s pension schemes
The best method to save money for your
retirement planning is to join the retirement options provided by your
employers and contribute to it as much as possible. The options provided for
retirement are usually much deliberated upon and offer the best returns on your
savings. Moreover it is easy to handle and safe investment for the retirement.
Invest in a second house
Investment in a house can be a sure shot success
method for savings for your retirement planning. The returns on real estate
investment have been stupendous over a long period of time. In your working
life, you should consider investing in a second house if you already own a
house for accommodation. Owning a second house will provide you with a cushion
for your retirement as it can be disposed off any time to meet your unexpected
financial needs.
Protect against risk with an insurance policy
If you were to die unexpectedly during your working
years, your family would not only suffer the loss of your income for day-to-day
needs, but also the nest egg you would continue to build for retirement. Life
insurance can provide for both your family’s current lifestyle as well as your
survivor’s plans for retirement. The permanent life insurance you use to
protect your loved ones can be another possible source of income in
retirement. Permanent life insurance accumulates cash value that grows tax
deferred. If you no longer need the full death benefit after you retire, you
can access that cash value to help supplement your retirement income.
Avoid over-diversification of savings
You want to diversify among different asset classes and underlying investments to manage risk, but if you are duplicating
the same investments with numerous vendors, you’re probably overpaying fees and
that can impact your bottom line.
Revisit your investment strategy
Look for ways to get a little more growth
without more risk than you can tolerate. If you choose only the most
conservative investments for your retirement savings, your savings may not grow
fast enough to give you the income you need after you retire.
Follow the sound and prudent methods of savings and investment for retirement planning and enjoy the sunset days of retirement.
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