No matter how young you are, when you start your professional career, it is time to start saving for retirement. It is never too early to start. In fact, the earlier you start saving for retirement, the better off you will be when the time does come to hang up your work boots for the last time. If you are self-employed, this is particularly important to note. You have no one else worrying about your retirement finances for you. Find out the must know retirement investing tips that will help you prepare for a secure financial future in the post below.
Open An IRA
Opening an Individual Retirement Account, or IRA, is one of the best retirement investing strategies for self-employed entrepreneurs. This is the best account for you to start building up your nest egg. You can choose between opening a Roth IRA or opening a traditional IRA account. Your decision will be based entirely on your income eligibility, IRA rules and you own financial goals for retirement. Regardless of which one you decide to use for retirement savings, make sure you open it right away. Otherwise, you are wasting precious time for compounded interest.
Take Advantage Of Tax Credits
If you make under $61,000 a year, you probably qualify for a tax credit for retirement savings contributions you make. Take advantage of it. These retirement tax credits will help you owe less to Uncle Sam at the end of the year. In some cases, it may even give you a substantial tax return. Then, you can turn and re-invest those tax savings into your retirement savings account with a contribution from your tax return. This is simply smart personal finance management for all retirement investors who are not fortunate enough to know the endowment definition. Make sure you take advantage if you are able.
Plan Where To Retire
Before you start saving for retirement, you want to have a smart plan in place for where to live after retirement. Some states do not charge state income taxes for residents. These are the best places to retire. It allows you to keep more of your money. If you know you are going to retire in one of these income tax free states, like Florida, Washington or Texas, you can better plan how much money you will actually need in retirement. You will be able to save less money for your nest egg, but have it go further when it comes time to retire. If you are investing for retirement, make sure you plan where you will live post-retirement. This way, you have a realistic investment goal in mind for you particular retirement plan.
If you are self-employed, a good rule of thumb is to invest 15% of your income towards retirement. Top financial advisors recommend that this the optimal retirement investing contribution amount. If you do choose to invest this much, you are sure to be able to retire comfortable. In addition, you will also still be able to live your life comfortably and just as you ordinarily would had you not been investing for retirement. If you want to be financially comfortable and secure both now and in retirement, start investing 15% for your future nest egg.
Set It & Forget It
When it comes to investing for retirement, the absolute best investment strategies are those that do nothing. That is right – nothing at all. Retirement investing is long-term investing. For this type of investing strategy, the longer you leave your money alone, the better it will before. It is better able to ride out the highs and lows of the stock market. That means by the time it comes to retire and cash out your retirement investments, your portfolio would have had many years to level out the lows with the highs. The best retirement investing strategies are the ones that require you to do nothing. Keep that in mind when you start investing for retirement savings.
If you are self-employed, navigating how to save for retirement on your own can be difficult and overwhelming. This is particularly true if you are just starting out in your professional career and have not started to learn how the stock market works or how investing works at all. If that is the case, learn how to invest for retirement using the tips above. These retirement investing tips are straight from the investment experts that you would otherwise have to pay top dollar to have access to with a prime broker. Get started investing for retirement right away, and you are sure to have a nice financial cushion to enjoy a long and happy retirement.