How to Save for Retirement
With all of life's expenses, it can be
difficult enough to pay the monthly bills, let alone save any
money for retirement.
So even if money is tight, here are some quick tips to think
about when it comes to saving for your silver years.
| Make a budget – and include savings |
Follow the old adage: pay yourself first. That means make sure you take money from your paycheck for savings and sock it away before allocating the rest to your bills and entertainment "fund". Even if right now you can only save a little bit, it's much better than nothing and it gets you in the habit of saving – very handy when you find you have some extra cash.
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| Participate in your 401(k) |
It's the automatic, "brainless and painless" way to save for retirement. Your employer takes out a dollar amount or percent of your paycheck and puts it into your 401(k) or other retirement fund before the money is taxed. Because the money is put away pre-tax, you probably won't notice a big difference in your take-home pay, but you will notice how quickly you can build up your retirement fund. Also, many employers will contribute a percentage of your contribution into your account – essentially free money – so take advantage of it. Just make sure the money you put away is invested in bonds, stocks, mutual funds or a combination of all three to make sure your money is growing at a good rate.
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| Supplement your 401(k) with other retirement accounts |
In addition to a 401(k), try to put some money into another account like a Roth IRA or tax-managed fund. Besides saving for your future, you can receive another benefit: you can reduce your taxes by putting some of your savings into one of these types of accounts, sometimes quite significantly. And if its tax time and you end up having to pay extra taxes, do the math to see how a deposit into your retirement account will affect the amount you owe. You may be able to reduce the amount you owe on your taxes to zero!
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| Quit keeping up with the Joneses and save instead |
It's amazing how easy it is to live up to, and spend, a salary– no matter how much or little. So the next time you get a raise, especially when you're within 10 years of retirement, save the extra money instead of spending it. Enjoying life has little to do with things, which becomes very apparent as you get older. Just remember: when you're in your golden years are you going to sit back and reminisce on buying that , or are you going to think about the people in your life (and how glad you are that you have the retirement money to sit back and think about all the good times).
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Remember: winning the lottery is not a retirement plan. Saving for retirement is not as painful as it might seem – even small amounts can add up to large savings. So start thinking about these tips, or start working on them now, so you can enjoy life in the future.
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