After years of service, when you finally retire, your main concern will be to keep the flow of money coming. Saving is most helpful for that. The more money you save now, the better off you’ll be after retirement. If you are a firefighter or a police officer, you’ll retire with a handsome amount of money.
But now everyone can expect a lump sum at retirement, so you’ll have to start saving from now on. In this article, we’ll give you some tips on retirement savings.
Save from annual income
This is the easiest and simplest way to save money for retirement. Try to save 10% to 15% of your annual income. Set up a separate account for retirement savings and funnel the annual contributions into it. It’s just like planting seeds; after 15 or 20 years, the seeds will grow into a giant tree. If you start saving 10 or 15% of your annual income from now, at the time of retirement, there will be a sizable amount in your account.
Credit card debt payoff
We all use credit cards to purchase something online. It’s easy and convenient. On the flip side, however, credit cards with high interest rates result in debt, and debts keep accruing. You should pay off the debt now because if you don’t, it will bug you after retirement. Another thing you can do is to use a low-interest-rate credit card.
Take advantage of the 401(k) plan
Most employers offer a 401(k) plan to employees. The plan lets you make a salary deferral. You can save a certain amount of your paycheck before taxes are taken out. Once the money you want to save is withdrawn from your account, taxes will be assessed. There are many plans under 401(k). The plans are mostly mutual funds that consist of stocks, bonds, and money market investments. You can take help from a professional consultant to decide which plan would suit you best.
Meet your employer’s match
An employer offers a match on an employee’s contribution. Make sure you meet that match. For example, if your employer matches 50% of your contribution to 5% of your annual salary and if your salary is $100000/year, your employer will generate $2500 for you, other than the $5000 that you will contribute. So check the matching contribution offered by your employer.
Open an IRA account
IRA is the acronym for individual retirement account. There are many IRA plans, and they come with plenty of advantages. For example, Roth IRA plans offer tax-free money to the saver. Also, if you withdraw Roth IRA savings, you won’t have to pay a penalty. Yet another advantage of a Roth IRA is that you can keep contributing after the age of 70½, unlike the traditional IRA plan. So study those plans and choose one that would best serve your interests.
A recent survey has shown that more than 30% of workers have less than $1000 in retirement savings. You shouldn’t be among those 30% of people who start saving for their retirement from now.
