How to Start Saving More Toward Retirement
As a general rule, Americans don’t do delayed gratification well. We live in a youth-oriented society that moves at the speed of technology without a thought for what is going to happen tomorrow. We live, work and consume, and push away thoughts about what it might be like for us when we are older. We know that one day we will want to retire from working every day, but that abstract thought is not grounded in taking the action to prepare for retirement.
Here are a few tips to get you thinking about making solid preparations for your golden years. If you want to continue to enjoy a close approximation of the lifestyle that you enjoy today, then careful planning is required.
How much will you need to retire on?
The basic rule of thumb is to start saving as much as you can, as early as you can, to take advantage of the power of compound interest. Fidelity recommends saving eight times your ending salary to ensure that you don’t outlive your money. There are several free retirement income calculators online. You just answer a few questions and it will return an estimate of how much you should be saving.
Put your savings on auto-pilot
Regardless of how small you start, if you have not started saving at all, it’s not too late. Go to your payroll office and have a percentage of your paycheck automatically deposited to your savings account. Do that once and then your savings habit becomes hands-free. Make retirement savings a priority and don’t touch this money for any reason.
Contribute to your employer’s retirement savings plan
If your company has a retirement plan in place, sign up and contribute as much as you can. It is pre-tax income, and if your company kicks in with matching funds, that’s free money. If they do not have a retirement program, ask them to start one.
Learn about investing
Do you know how your company’s retirement plan is invested? Do you understand the difference between stocks, bonds and mutual funds? Depending on your age, risk tolerance and what is going on in the markets, you’ll want to learn how to diversify your investments to make the most of the time and money that you do have.
Open an Individual Retirement Account
You can invest up to $5,500 per year in an Individual Retirement Account (IRA), more if you are older than 50.
Research your Social Security benefits
Visit the Social Security Administration’s website to get an estimate of your benefits. Knowing this figure will help in your retirement planning.
Work toward eliminating debt
You will not be able to afford all of this saving if you are mired in consumer debt. Take the necessary steps to figure out how much you owe and how long it might take for you to pay it off. If you’ve got a ton of credit card debt, medical debts or income tax debt, you might give some thought to using bankruptcy as a tool to get your finances in order. While declaring bankruptcy has enjoyed an unsavory reputation, it can actually help solve your personal debt crisis and get a fresh financial start.
The Atlanta, GA bankruptcy attorneys at DebtStoppers help clients evaluate their debt options in order to make informed decisions. Contact our office today at 404-796-7161 to schedule a free initial appointment and take the first step to financial freedom.