Many people look forward to the age of retirement, but sometimes their dreams of relaxation are cut short by worries over money. To travel the world and keep your lifestyle, you need to start working now to amass your fortune. Retiring rich isn’t a pipe-dream, so long as you are willing to start saving now and putting a good chunk of your income to the right accounts. Here are several strategies that you can use to help build up a healthy nest egg for retirement.
You Need a Plan
Speaking with a financial advisor from Summitry that knows the ins and outs of retirement needs can help you formulate your retirement plan. The big question everyone asks is “how much money do I need?” The answer will be different for each individual, since the cost of living, medical needs, and lifestyle have a lot to do with your future financial needs. Determine what you will be getting from your Social Security checks, and compare it to an estimate of what you will need to live. The difference between the two numbers is what you will need to have each year. However, you don’t want to scrape by on the bare minimum. This is where the other strategies become more helpful.
You Need to be Thrifty
If you want to save money for retirement, you need to start putting away more than you are spending. A good rule of thumb is to live as far below your means as possible. Don’t try to keep up with your neighbors or get a new car every two years. Use discounts or coupons wherever possible. Consider downsizing if the kids have grown and moved away. Cook at home and eat out less. Lower your cable expenses, or don’t renew your streaming subscription. Any way that you can lower your cost of living becomes more money that you can put in the bank.
You Need to Invest Your Savings
Saving money is a good place to start with your financial goals, but you should also start investing what you save. When you put money into an investment account, you get the benefits of compounding. Stocks are typically a beneficial investment in a long-term analysis, with $5,000 invested at year at 8% for 10 years yielding around $80,000. You really can’t afford to wait another ten years to get started on your investments. It could mean the loss of several hundred thousand dollars. Save as aggressively as you can, especially when you are younger and you have fewer financial demands on your life.
You Need to Consider Extra Income
Your job may not have a matching contribution plan or you may not have enough left after your expenses to save. You could always consider getting a second job for a few months or as long as it takes to get your finances under control. Secondary income sources also become a good funding measure for investment income. Even as you get close to retirement, working part-time as a consultant or getting a dayshift at a retail store can keep you from having to use up your nest egg early on. Bringing extra money could be the way to fund a trip overseas or upgrade your vehicle.
You Need to be Ready
You have to be willing and able to take the steps necessary to start building wealth. If you have unpaid debts or don’t have an emergency fund established, these take first priority. Putting your funds into the stock market for a long-term return of about 10% on investment is a terrible alternative to paying off your debts that accumulate 15-30% on outstanding balances. Have an emergency fund in the bank which holds at least six months of your operating expenses. Start working on your finances now so you will have some for later.