Sabtu, 23 Januari 2016

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Being secured financially in retirement does not just happen naturally—it will take commitment, planning and, of course, money! This means saving is of the utmost importance. Here are tips you should pick up to ensure you will be retiring comfortably:

Know your retirement needs.

Retirement can be expensive, where it is estimated to require you at least 70% (90% or more if you are a lower-earner) of your pre-retirement income to be able to maintain your standard of living by the time you stop working. So, take charge of your financial future, and the key here is to plan ahead.

Start and keep saving, while sticking to your goals.

If you already got some savings, whether for retirement or another purpose, do not stop! Remember that saving is very rewarding, and if you are not doing it, you might want to get started today. You can just start small and then try to increase the amount you save in a gradual manner. This means that the sooner you start saving, the more time your money would have to grow. Just make sure you set goals, devise a plan and stick to it!

Observe the basic principles of investment.

The way you save can be as important as the amount of savings you will have in the end. Take note that the type of investment and other factors, such as inflation, play major roles in how much you will have saved during your retirement, so be knowledgeable of how your savings or pension plan is invested. Learn about your options, ask questions and diversify by putting your money in different types of investments. This way, you will reduce risk and improve your returns. Remember that financial security and knowledge always go together.

Set aside some money for an Individual Retirement Account.

You can put up to thousands of dollars (though you are always free to start less) a year into an Individual Retirement Account (IRA) and then contribute even more if you reach 50 or older. When you open such an account, you will be given 2 options—the traditional and the Roth IRA—where the tax treatment of your withdrawals and contributions will depend on which option you take. An IRA can provide you with an easy way to save, where you can set it up to allow automatic deductions from your savings or checking account.

Take advantage of your employer’s retirement savings plan.

If your employer offers a retirement savings plan, do not hesitate to sign up and contribute as much as possible. By doing so, your taxes will be lower, as your employer would kick in more, and automatic deductions will be making things easier. Over time, the tax deferrals and compound interest will make a big difference in the amount you accumulate.

Most important of all, do not touch your retirement savings. If you withdraw it early, you will lose principal and interest, and may even lose tax benefits or have to pay for a withdrawal penalty. Keep in mind that putting money away for your retirement is a habit that you can live with. Saving really matters!

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