Having financial security once you retire is something you probably dream of, but don’t consider reachable. Most people will live about 20 years after they retire; however, most people also acknowledge they won’t have enough money to live that long. So what is everyone doing wrong and how can you avoid their mistakes? Our handy guide on retirement planning should help you get on the right track.
1. Start Small But Be Consistent
You don’t have to save a lot of money at first, but you would be doing yourself a favor if you started early. Putting away a small amount into a savings account consistently will allow your money to grow over time. When you’re thinking about how to save for retirement, you need to come up with a reasonable plan and stick with it!
2. Know What You’ll Need
It may seem impossible right now to know exactly how much money you’ll need when you retire. However, you can estimate you’ll need at least 70% of what you’re currently making in order to live the same lifestyle. This may seem like a large amount, but who wants to downgrade their lifestyle after retirement? When you have a target number in mind, you at least have something to shoot for.
3. Learn Basic Investing Principles
Spend some time researching different types of investment accounts, and if you need to, find a good financial advisor. One of the basic principles is to not put all your eggs in one basket, meaning to put your money in different investment accounts. By doing this, you’ll increase your chances of a risk free retirement because of your diverse portfolio.
4. Don’t Touch Your Money
Not only will pulling money out of your retirement savings decrease your principal and interest, but you’ll also be subject to withdrawal penalties and tax disadvantages. When setting up your retirement planning, make sure you keep enough money accessible to you so you don’t have to touch your retirement savings at all. There’s no major fault in rolling over your savings into other accounts if you need to, but avoid pulling money out if at all possible.
For more tips on how you can save for a risk free retirement, be sure to contact us for helpful information tailored to your specific financial situation.