Don’t think this is a long way off. Planning for retirement should be as early as possible. Plan carefully to ensure you are on track for a comfortable retirement. To retire well, implement these tips:
Contribute
It is important you decide how to reach your retirement goal. If you want a nest egg that can annually deliver between 70 to 90 percent of your pre-tax, pre-retirement salary, then it is important to decide how to reach your retirement goal. How much will you need to contribute to reach that goal? More importantly, how will you ensure those contributions are made?
You need to create a budget of your recurring expenses and include your savings contributions as a monthly expense. A budget will also clearly show you where your money is going and should also provide some insight into what debts should be dealt with first. Now that a plan is in place, you are going to need to change your mindset in order to stick to it.
Save and stick to goals
If you are already saving, whether for retirement or another goal, keep going! Saving is a rewarding habit. If you are not saving, get started. Start small if you have to and try to increase the amount you save each month. Make saving for retirement a priority. Devise a plan, stick to it, and set goals.
Know retirement needs
Retirement is expensive. According to www.yourlifechoices.com, experts estimate that you will need at least 70 percent of your pre-retirement income (lower earners, 90 percent or more) to maintain your standard of living when you stop working. Take charge of your financial future and plan ahead.
If your employer offers a retirement savings plan, sign up and contribute all you can. Find out about your plan. For example, how much would you need to contribute to get the full employer contribution and how long would you need to stay in the plan to get that money. If your employer has a traditional pension plan, check to see if you are covered by the plan and understand how it works. Ask for an individual benefit statement to see what your benefit is worth. Before you change jobs, find out what will happen to your pension benefit.
Consider basic investment principles
How you save can be as important as how much you save. Inflation and the type of investments you make play important roles in how much you have saved at retirement. Know how your savings or pension plan is invested. Put your savings in different types of investments. This way, you are more likely to reduce risk and improve return. Your investment mix may change over time depending on a number of factors such as your age, goals, and financial circumstances.
Don’t put all your eggs in one basket
This saying couldn’t apply more to saving for retirement. A person heavily involved in just one type of investment is more vulnerable to financial problems if the markets associated with that investment goes down the drain. Don’t stop with just stocks and bonds when diversifying your portfolio. Investing in largely unrelated sectors, like pharmaceuticals and telecommunications, is a good idea.
Don’t touch retirement savings
You should designate an amount of your pre-tax income to contribute to your retirement savings on a monthly basis and have it taken out of your pay check, just like your taxes. It’s easiest to save money when you don’t have it in your hands. If you change jobs, leave your savings invested in your current retirement plan, or roll them over to an IRA or your new employer’s plan.
Ask questions
While these tips are meant to point you in the right direction, you will need more information. Talk to your employer, your bank, your union, or a financial adviser. Ask questions and make sure you understand the answers. Get practical advice and act now.
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