Financial security in your retirement will need some advance planning, and you’re never too young to start planning. If you prepare in advance for your retirement you can better manage your finances to make your money last as long as possible and plan ahead in case of illness or another incapacity.
1. Start saving as early as you can
The earlier you start saving for retirement, the more money you can save. Even saving just a small amount every month can be enough.
Put aside a small amount and stick to it. It’s never too early to start saving. If you start now, you can spread out the cost of setting up your retirement fund.
2. Pay into your employer’s pension plan
If your workplace has a pension plan, pay into it so they will make contributions, too. You might pay less tax on your contributions, and over time, this can help you to save a lot more. Ask your HR department about any 401k plans they have that you may be able to join too.
3. Don’t spend your retirement savings
Don’t touch your retirement savings unless it’s an emergency. Once you’ve started saving, don’t be tempted to use any of the money for something else, unless you truly have no other option.
If you dip into your retirement fund, you’ll have less to live on later. If you struggle to leave your savings where they are, a financial advisor can help you to manage your funds better.
4. Take advantage of different kinds of retirement accounts
If possible, increase your contributions to the maximum allowed in your 401k, IRA, or other retirement plans. Try to get enough into your 401k to qualify for any contribution matching your employer will make. The more you can pay in, the more they’ll pay in, giving you more retirement savings.
5. Consolidate your accounts when the time is right
As you get older, you could consolidate accounts to make it less complicated to manage them. Combine any IRAs of the same type with one institution. Find any old 401k you have with former employers.
Organizing your money into fewer places will make it easier to track how much you have and where your money is.
6. Shrink your debt
Pay more into your mortgage payments now if you can afford to. Aim to pay it off before you retire, giving you one less thing to pay for. Then, if you decide to downsize when you retire, perhaps to one of the over 55 patio homes that so many people are enjoying, you will be able to put the entire sale of your home toward something that suits you, without having another mortgage.
Avoid running up new debts on credit and instead, try to pay cash for any big purchases you make. No new debt means your retirement income doesn’t need to be spent on interest payments or paying down debt.
7. Set aside some money for your future care
If you’re worried about how your children will afford your care, set aside some funds. Think of medical bills, funeral costs, or nursing home bills. Emergency funds for paying unexpected health care emergencies or moving to a retirement home are also a smart idea.
Recap: Plan for retirement
If you plan for retirement now, it will make your life much easier in the long run. You won’t have to worry about finances, and you won’t have to spend your later years working.
What are some of the ways that you are planning for retirement? Let me know in the comments!
