Whether you're 25 or 55, the smart financial strategy is to begin to save for retirement. We all will eventually retire, voluntarily or out of necessity. Whether you're transitioning to retirement planning or need to get up to speed, or you're a financial advisor looking to help a client prepare for the years ahead, these essential retirement planning tips will put more money in your bank account.
Set retirement goals and begin: A survey showed that 55 percent of active workers now have a retirement bank account, while 25 percent have no retirement savings. More so, US citizens aged 30-40 saved averagely $38,400 for retirement, while Americans aged 20-30 saved averagely 10,500 dollars. If you fall into one of these age groups & haven't thought about retiring, don't panic. To start planning for your financial future, it's never too late to.
What amount of money should you be saving for retirement life? The 80 percent rule postulates that after retirement, you must live on about 80 percent of your income before retirement. This entails if your annual income before retirement was 100,000 usd per year, you would be living on around $80,000 each year after retirement.
Get an Employer Match 401(k) or 403(b): If your workplace offers both a retirement plan and an Employer Match, you must contribute up to the amount used by the business. To get the most retirement benefits, contribute to your retirement plan up to the maximum amount allowed by law. Start now with the highest financial gain.
Let's say you're in the 12% tax bracket and plan to donate $100 per pay period. Because this money comes out of your paycheck before federal income taxes are assessed, your take-home pay is only $88 less (plus the amount of applicable state and local income taxes, Social Security, and Social Security taxes). This means that you can invest more of your income without feeling it in your monthly budget.
Pay off debt and stay on a budget – a lot of debt can eat into your pre-retirement savings. Allocating extra income on your credit card, car, personal loan can help you save a lot more for retirement. Another effective way to generate savings is creating a budget. Put in writing your recent bills, for instance; groceries, insurance, Student loan payments, utilities, mortgage payment, or credit card payments s. After creating a list, note the areas where costs can be reduced. It is helpful to ponder on these questions:
- Do your expenses exceed your income?
- Can you get better fuel economy using a smaller vehicle than the one you are driving?
- Will you lower your gas costs if a few times a week you take public transportation to work?
- Will cutting off extra costs like cable or streaming video services to save a few extra money per month?
- Can you combine unpaid credit card debt into lower monthly payments at a lower interest rate?
- Can you negotiate a lower interest rate on your student loan payments?
How much time are you ready to dedicate to becoming Financially Independence? With a few simple steps, you can give your retirement planning a big boost. Just put more emphasis on finding the extra money in your budget, automating the savings process and cut off costly debt payments. Once you automate debt avoidance habits and smart savings, you'll get a huge positive boost.
