As a Financial Advisor, I find that a lot of the clients I work with are looking to save towards their futures so they can enjoy their golden years. For most, this means putting a retirement fund in place that will ensure they have a nest egg of cash to work with when they finally hang up their boots.
Of course, there are always ways to boost your retirement fund so it stretches a little further, so here are some great tips that will help.
Many people wait until they reach their peak earning years before they start putting money aside for the future. This often comes from the mistaken belief that there is no point in putting money away for later when they are young. However, nothing could be further from the truth. Even putting a small amount of your paycheck into a savings account can help, as that money will start earning interest and will do so over a longer period of time.
You also don’t need to be a big earner to take advantage of investing opportunities. As long as you have sound advice and do your research, it is entirely possible to stretch your money further by investing in good opportunities. Diversify as much as possible and don’t invest more than you are comfortable losing, as even the surest investments still carry some risk.
If you employer offers a 401K plan, you should look into getting on it as quickly as possible. Best of all, the money you place into the plan comes out of your pay packet pre-tax. In real terms, that means placing $100 a month into a 401K means you get an extra $15 from your pay, assuming you fall in the 15% tax bracket.
Evaluate Local Taxes
There is a reason why so many retirees choose to spend their golden years in Florida. The state offers “no state income taxes” and also doesn’t tax social security. Each state has different regulations in place when it comes to tax, so it is worth your while to research them. A move away may actually save you a lot of money in the long term.
Pay Off Your Mortgage
A lot of people fall into the trap of re-mortgaging so they can consolidate their existing debts, but this means they end up paying far more than their house is worth before they fully own it. A better idea is to ensure you don’t spend beyond your means elsewhere, allowing you to get your mortgage fully paid off so you don’t need to worry about it when you retire.
Automate Your Savings
If you have decided to put a certain amount away each month, it is a good idea to automate the process so you don’t get tempted to spend the money before it reaches your savings account. Set up a direct debit that takes however much you wish to save and puts it into another account before you need to pay bills and figure out how much expendable income you have. It’s easy to set-up and will help you save.
Know Your Retirement Worth
A lot of people get nervous about their retirement because they don’t fully understand just how much they will have available to them when they stop working. By putting a plan in place that determines just how much money you will save, you can also figure out how much will be available to you when you retire. This means you can consider how you will manage your life after work and can also be a spur to put more aside if you don’t believe you will be comfortable.