There are many exciting financial milestones to achieve in a lifetime. They include opening your first credit card, buying a car, getting approved for a mortgage—but there’s one that stands out as the most monumental of all. Being able to retire! After a long career, being able to kick back and relax is really what makes all of your hard work worthwhile. But before you can truly enjoy your sunset years as a new retiree, you need to make sure your finances are in line with your retirement savings goals. Yes, it requires years of preparation, but that’s why it’s so important to start now. With these simple tips you’ll be ready to comfortably retire in no time. Learn how to properly save for retirement by reading this post.
Establish Personal Finance Goals
Before we can dive into our money-saving tips, establish some goals to guide your retirement saving efforts. If you’re counting on getting Social Security benefits when you retire, you’re probably asking yourself, “how much do I need to retire at 62 when my SSI funds kick in?” The answer really depends on your personal finance situation, but the average retiree spends approximately $3,800 per month, while the average Social Security payout is $1,300 per month. As you can imagine, that number really adds up! This is why it’s important to start saving ASAP using these tips.
Open A Retirement Savings Account
The first step toward financial security in retirement is opening up a retirement savings fund. There are many different types to choose from each with a unique structure and savings plan. For some, 401ks make the most sense because employers match employee contributions up to a certain dollar amount, which is an excellent way to bolster your savings account. Plus, using a 401k plan is an easy way to save for retirement without even really having to think about it since money is automatically withheld from your paycheck and put toward your retirement savings.
If your employer doesn’t offer a match program, it might make sense for you to set up an Individual Retirement Account (IRA) instead. When choosing a retirement account, be sure to review how the differences between 401ks and IRAs will impact your finances and choose whichever account will allow you to make the most out of your savings. Consider the Roth IRA penalties and 401K guidelines to gain a clear understanding of both options.
Note: Another benefit to saving for retirement is that you can claim certain tax deductions for money that you contributed to your retirement savings plan.
Get A Part-Time Gig
If you’re not able to contribute much to your retirement savings at the moment, you might consider getting a part-time job to help you build up your savings. Instead of factoring in the money you earn into your regular income, just put everything aside into a retirement fund to help you prepare for your sunset years.
Save Your Tax Refunds
Getting a tax refund in the mail is a relief every taxpayer hopes for. Many of us are tempted to buy something we’ve wanted all year long, but another great use for your tax refund is your retirement savings account! So why not hold off on buying that pair of sunglasses and put your cash toward a long-term investment instead?
Rent Out Your Property
One of the best ways to boost your retirement savings is to take advantage of the assets you already have. This way, you don’t need to sacrifice much time or money to start cashing in on some extra cash. Even if you have just a spare room available, you might consider renting it out to a tenant—or if you’re looking for a less permanent option, you might opt for a vacation rental site.
Or perhaps your home doesn’t have lots of space to spare, but your property is expansive. Try listing your land on a private camping site. This way, you can preserve your personal space and time while still bringing in some extra money that will make a big difference when you retire. Review the best places to advertise rental property to attract travelers. Then, you can earn capital and save for retirement.
This one may seem obvious, but it’s really the most important. If you don’t start setting goals for your retirement and make an effort to start saving now, you probably won’t have much to work with when it’s time for you to retire.
Get Out Of Debt
Moreover, get out of debt to successfully save for retirement. A great way to start reducing your debt is to pay more than your minimum payments. That way, you can spend less capital on interest and get out of debt faster. Once you are out of debt, you can focus on putting any capital that you used for previous credit card payments toward your retirement. Keep this tactic in mind as you prepare for your future retirement this year.
Establish An Emergency Fund
In addition to the above methods for saving for retirement, establish an emergency fund. By creating a fund for emergency situations, you avoid falling into debt when a surprise expense comes up. Unfortunate events such as car accidents, unexpected medical conditions and home issues require large sums. When individuals do not have the capital they need to pay for such expenses, they typically resort to loans. In turn, they fall into debt and cannot effectively save for retirement. Assure that this does not happen to you by establishing an emergency fund early on. Then, you can prepare for surprise costs and save up for retirement simultaneously.
Use these tips to help you start saving and enjoy your best retired life!