NOW! is the right time to start planning for your retirement.
I was speaking with my niece who has just completed 25 this spring and I asked her if she has started planning for her retirement and she goes as you would imagine: “retirement?!!” (with all the surprise emoji looks you can imagine) but I’m only 25years old…I still got a long way to go before I retire…”
That would of course have been my own reaction as well if I had been asked the same question when I was 25. But oh, how I wish I had been asked the question back then and that I knew what I know now.
The truth of the matter is that it is never too late to start planning for your retirement regardless of your age now. Infact, the earlier you start the better it is for you.
According to money.cnn.com, The answer is simple: as soon as you can. Ideally, you’d start saving in your 20s, when you first leave school and begin earning paychecks. That’s because the sooner you begin saving, the more time your money has to grow.
It’s a no brainer!
Nobody wants to get to retirement and find out that they don’t have enough savings to continue to live their lifestyle or at least a semblance of it and they’d have to depend on handout from relatives, friend, charity.
I certainly do not want to be a liability to others and to myself! In as much as we live for the day and try to enjoy life to the fullest, there is the high possibility that we are going to live long and possibly reach retirement. So, planning for the future should be a top priority to everyone.
For the benefit of our audience and my dear niece, we decided to have a guest post from one of our friends who has got years of experience blogging on this topic. We sincerely think someone out there will definitely benefit from the post.
Most of her advise is based on the American setting because she is based in America but it is true for any where you may be. All you need to do is seek out the best solutions in the country you are at.
Hope you enjoy reading!
Right track to secure your retirement lifestyle
Do you have enough savings for your financial future? If no, then get ready for several problems including public embarrassment, no financial security after retirement, unwanted stress, lack of financial freedom name it. I’m going to take a wild guess and say nobody wants that!
Securing the financial future of retirement when you will not have a fixed income is very important. Because, without enough savings, you will not be able to live the lifestyle that you are living now.
There are a lot of people in America or anywhere else in the world for that matter facing poverty in their retirement due to a lack of savings and adequate preparations. So, it is wise to secure retirement days now when you have a fixed income source. Proper savings can only keep you on the right track to get the lifestyle that you want in the future.
3 steps to secure your retirement lifestyle
To secure retirement, you need to save more and build wealth.
Many people know this. But when it comes to saving money, they fail. Because they don’t follow some constructive steps.
For example:
Step 1: Paying off your current debts
Step 2: Saving more
Step 3: Making right investments
Step 1:Getting out of current debts
The steps may seem simple but difficult to follow. Not all who promise to do it can make it possible. Because most people are in debt already which is not helped by the society we live in. Loans, credit card, mortgage, overdraft name it. These are all ways we get ourselves entangled in debt without realising it. And the key to becoming a wealthy person is living a debt free life first.
If you are determined to secure your retirement, then you have to find out the effective solution to get out of debt fast. Parallelly, make sure you’re not of them who loves to waste their hard-earned money on useless stuff.
Living a debt-free life and becoming a wealthy person is possible. Here you go:
● Follow a budget
To repay your current debts, you should formulate a budget. It will help you to set aside money so that you can make debt payments. So, subtract your total expenses from the total income to get the net worth. You can use the total net worth for making debt payments.
● Take out a consolidation loan
If you are struggling to make credit card payments along with other monthly bills, then take out a consolidation loan to repay all your due payments. You just need to manage the new loan by making the monthly payments on time until you repay it.
● Follow the debt avalanche method
If you have multiple numbers of high-interest rate credit card debts, then follow the avalanche method to repay them. Arrange your debts from highest amount to lowest. Make bigger payments to the highest amount of debt while paying the minimum to the other debts.
Once you pay off the highest debt, target the second-highest amount debt in the list and follow the same method. Don’t forget to make minimum payments to the other debt while making larger payments to the target debt. Continue the method until you repay all the debts.
● Settle your debts
If you think you can’t pay off the total debt you owe, then go for a settlement. Contact a debt settlement company to enroll in the settlement program. In a settlement program, you need to repay a reduced amount of debt. The negotiation process will be managed by the settlement company.
Step 2: Saving enough money for the financial future
To secure your retirement days, you need to save as much as possible from your current income. To do so, you need to follow these tips below:
● Cut down expenses
Your budget should clearly outline the areas in which you’re spending money. You must keep track of every single penny that is going out of your pocket. If you see that you’re unable to meet your 10% commitment with your current expenses, try starting with your budget.
Find out any small expenses that can be slashed off from your budget. It can be as small as eating out, extra cable packages, expensive trips or anything else. Put that saved money into your savings account so that you may be able to save religiously. Budgeting practices must be done practically and creatively so that every step helps you learn something new.
● Build a sinking fund
A sinking fund can help you to meet all the planned expenses like planning birthdays, throwing New Year party, or planning a vacation. However, to set aside money to build a sinking fund, you have to follow a budget.
Otherwise, you won’t be able to manage your mandatory expenses. Also, you shouldn’t use the sinking fund for other expenses. This will not let you achieve that particular goal for which you saved. Often mindless spending eats all your savings and you have to take out a short-term loan or use credit cards to achieve an important financial goal.
So, try to stick to your decision to avoid mindless spending. It will help you to build multiple sinking funds along with a fat emergency fund, and retirement fund.
● Build an emergency fund
You need to save money for emergency expenses like a sudden illness, car breakdown, job loss, or accident. You have to save at least 6-9 months of savings in an emergency fund.
● Grow your income
To save money, you need to boost your income level. If you can’t set aside money after managing mandatory cost with your current income, then look for additional income opportunities. Do part-time work beside your main job.
Step 3: Making proper investments for retirement
Once you have saved a decent amount of savings, it’s high time that you start making your money work for you. Start your bit of research on investments that can offer you additional growth in your income. Your financial goal must be to diversify your investment portfolio by spreading your money in different financial instruments to minimize your risk and maximize the returns.
● Open a 401(K) plan
If you’re just “getting by” now, then chances are high that your retirement years will be spent in extreme difficulty.
Thus, you need to save rigorously so that your golden years are not damaged by the debt disaster. Start contributing to the 401(k) account and amass wealth for the near future. You may withdraw money from this account whenever you need post-retirement.
Maximize your savings by making use of financial vehicles like the life insurance policy and 401 (k) accounts.
● Consider SIMPLE IRA, SEP IRA, and Solo 401(k)
N0 matter what your profession, you need to secure your retirement to maintain the same lifestyle. There are various retirement plans for people who are businessman or entrepreneur. If you are a self-employed person, then you can consider SIMPLE IRA, SEP IRA, and Solo 401(k). These are tax-deferred retirement plans and give good returns for securing retirement.
Lastly, many people don’t plan for their retirement, which is a blunder. Some people plan their retirement without consulting with a Retirement Planning Counselor. Sometimes, they end up with poor savings. Thus, you should consult with a professional financial advisor who can give you a better savings plan. You can also discuss the plan of your investments, in case you’re not familiar with the investment market. So, if you haven’t started planning for your retirement, then let’s get started this year. Because there is no right time for retirement planning. Every time is just right to make plans and take the first steps towards saving for retirement.
It is advisable to always seek financial advice from financial experts in the country you are to get the best legal advice possible.
Writer Linda Richardson.