10 Tips for Creating the Perfect Retirement Plan
Over 60% of Americans aren’t prepared for retirement. In fact, 45% claim they have absolutely no money set aside for retirement. Another 19% said they have less than $10,000 to their name.
It’s never too early to develop your retirement plan! Planning now can give you peace of mind.
Otherwise, you might not realize how little you have set aside until it’s too late.
Here are 10 tips that can help you plan your retirement. With these tips, you won’t have to live off your social security benefits alone.
Start saving with these 10 tips for a successful retirement today.
1. Invest as Soon as Possible
More than half of US households have some investment in the stock market. You don’t have to leave your money sitting in the bank. Instead, start investing to ensure the money you’ve saved grows.
First, consider your long-term and short-term goals. Most people start investing to put money toward their retirement plan. However, you can also invest to pay off debts or plan a future vacation.
Once you establish your goals, determine whether or not you want help. You can work with a financial advisor to get started. You can also use apps to begin investing.
Consider what type of investment account you want to create, too.
For example, many employers offer a 401(k). A 401(k) takes contributions right from your paycheck. Your employer might even match your contributions (up to a limit).
Otherwise, consider a traditional or Roth IRA. With a traditional IRA, your contributions are tax-deductible. The distributions are taxed as ordinary income, though.
A Roth IRA, on the other hand, has the opposite tax treatment. All contributions are made after-tax. Your money will grow tax-free as a result.
Start choosing the types of investments you’re interested in, such as stocks, bonds, or mutual funds. Make sure to diversify.
Investing early can help you start saving as soon as possible.
2. Make Regular Contributions
Making small, regular contributions to your retirement savings can help those contributions grow.
Determine how much you want to contribute to your retirement each month. Then, keep putting money toward your retirement account. The interest will compound your savings, helping the account grow.
Most Americans don’t know how much money they need for retirement.
Take the time to calculate your personalized savings goal. Your goal will likely vary based on your:
- Life expectancy
- Projected retirement lifestyle
- Current spending and savings habits
A financial advisor can help you plan your retirement with these factors in mind. You can find an additional source on retirement here.
3. Plan, Prioritize, Protect
As you build your retirement plan, make sure to plan, prioritize, and protect.
First, consider how much you want to save each year. For example, you might want to save 15% of your annual income and set it aside for your retirement.
How much you save can vary based on your retirement goals.
Then, start prioritizing with your future in mind. For example, you can look for ways to cut your expenses. Cutting back now can help you save more in the long run.
Make a list of your current expenses. Then, look for ways to cut back. For example, you can stop ordering out and limit your subscription services.
Next, you’ll need to protect your savings. You might feel tempted to dip into your retirement savings. Don’t.
Instead, create a separate emergency fund for those unexpected expenses. You can preserve your retirement savings without stress.
4. Enroll With Your Employer
Does your employer offer a retirement savings plan? Ask if they can match a percentage of the funds you save.
Remember, saving today can protect your future. Consider enrolling in your employer’s retirement plan as soon as possible.
5. Work With a Financial Expert
You don’t have to plan your retirement plan alone. Instead, consider working with an expert. A financial expert can save your time, money, and stress in the long run.
They can help you find new ways to build your retirement savings. They can also help you avoid making costly mistakes.
Your financial planner will consider your unique goals and needs. Then, they can help you review the options that suit those needs.
6. Prepare for Inflation
Inflation can lower the value of your money. An item that might cost you $5 today could cost twice as much by the time you retire. With that in mind, you’ll need to plan for inflation.
Try to save more than you think you need. Saving extra can help cover your living expenses.
Otherwise, you might find out you didn’t save enough by the time you retire.
7. Get a Side Hustle
Earning passive income can help build your retirement savings. Test different ways to earn passive income, including rental properties and investing.
Otherwise, look for a side hustle. For example, you can start babysitting or work as an Uber driver. Consider working for Fiverr or other online services, too.
Getting a side hustle can help you bring in more money.
8. Pay Off Your Debts
It’s important to get out of debt as soon as possible. Otherwise, your debts could impact your ability to retire.
Use the avalanche method to pay off your debts. Start with the debts that have the highest interest rate first. Spend more money paying those debts off.
Once the debt with the highest interest rate is paid off, work on the next highest.
The less you owe, the longer your retirement savings will last you.
9. Consider the Cost of Living
As you build your retirement plan, consider looking for a place with a low cost of living. You can stretch your budget without overspending on basic expenses.
10. Create a Budget
Set a budget and stick to it! Don’t spend more than you make. Instead, limit your spending to put more money toward saving.
Track your monthly expenses, too. You can determine where your money is going, then find ways to cut back.
Successful Saving: 10 Tips for a Successful Retirement Plan
Building your retirement plan doesn’t have to feel stressful. Instead, keep these 10 tips in mind. With these tips, you can plan your retirement with ease.
You’ll have peace of mind knowing you have money saved away.
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