If you are in your twenty-something, or maybe thirties, chances are that you have at some point asked yourself, “how much do I need to save for retirement?”. I can safely bet that you still haven’t come up with a concrete plan for safeguarding your financial life when you eventually hang the boots.
Tell you what my friend; you aren’t the only one. As a matter of fact, research has shown that those in their 20s and 30s, or millennials as they are fondly referred to, are having a hard time putting away money for retirement. Some have fallen into the deep trenches of debt and financial woes – even at an early age – that the prospect of preparing for retirement has hidden beyond their horizon.
The good news, however, is that it is never too late to start preparing for the future, no matter how messy your financial life may be right now. Here are 6 hacks to get you up and running to saving for retirement.
#1. Save, save, save
No matter how you choose to look at it, nothing still beats putting money into savings when it comes to securing one’s financial future.
Of course, saving doesn’t naturally come to us. Even at that, you still have to. A good first step to mastering the art of saving is to start small.
Say you earned $1,000 every month after tax. Putting away $100, which is just 10% of your income, shouldn’t be much of a problem. Do this consistently for 5 years, and you would have $6000 locked away in your savings. Cool huh!
#2. Stash money into your 401k
Putting money into a 401k pension plan is probably the easiest way to save for retirement. The reason is that all you need to do is to determine how much you want to save on your monthly income, and everything goes on autopilot.
Even better, take full advantage of 401k matching if your employer is offering one. That way, you would end up doubling your retirement saving in a very short time.
#3. Steer clear of debt
Debt is invariably the enemy of wealth. It is one of the hurdles you need to hop over in your pursuit to a secured financial future.
Debt, when not managed properly, can land you in the sea of penury.
One good way to crawl out of the mire of debt is to discard whatever falls in the category of “want”.
Here are some things you can do right now to part ways with debt
- If you have a car bought on loan and rakes in hundreds of dollars in interest, sell it off.
- Avoid piling up credit card payment least they get out of hand
- Use less of credit card and more of cash
#4. Open an Individual Retirement Account (IRA)
IRA account is of two types: Roth IRA and the traditional IRA. From the standpoint of taxation, Roth IRA has an upper hand.
IRA works in the same way as 401k in that once you have determined the amount you wish to save up every month, everything else falls into place.
Shelling out $460 on monthly basis is enough to get you started with investing in IRA.
#5. Invest the little you can
Remember, the goal of keeping money away into savings is to have a fun filled life on retiring from work. So, instead of just settling for a retirement savings account, raise the bar by building up an investment portfolio.
An investment portfolio when successfully set up can make you richer at retirement.
If you have got some appetite for risk, investing in stocks could be a good fit.
Love playing it safe? Hand over your money to a Robo-advisor and watch as they grow your investment.
#6. Answer the “how much do I need to retire” question
Having at least a fair idea of how much you need to save to live comfortably on retiring takes care of a lot of problems. First, it helps you stay on track when detractors of every sort come knocking. Second, having a rough figure helps you calculate, with a certain degree of accuracy, the percentage of your income that will be kept aside for retirement saving.
The best financial decision you can make while still relatively young is saving up for retirement. You sure wouldn’t want to be running off to work every day by the time you turn 70 age, would you?