No matter how long you’ve been in the workforce, everyone typically looks forward to the day when they can retire. For many people, it will be a very joyful day when they can finally ditch the desk job and start traveling the world.
Despite your dreams for retirement, the unfortunate truth is many Americans just aren’t saving enough. When it’s time for you to retire, will you have enough saved up to live comfortably? Or, will you have to take up a part-time job to get by?
Consider the following tips from Mark Matson to help you on your journey towards a comfortable retirement:
Start saving as early as possible
When you’re in your twenties, saving for retirement is likely the last thing on your mind. But, this is the time to start saving. Most twenty-somethings have fewer bills and responsibilities (such as children) and are able to contribute more to their retirement. You should enroll in a 401k or Roth retirement savings plan as soon as you are eligible to enroll. The longer you save, the more you’ll generate from compound interest.
With that said, it’s never too late to start saving. If you haven’t saved anything in your twenties, start saving now. As a general rule of thumb, you should be saving 15 percent of your income. You should save more if you’re getting a late start.
Make a plan
It’s not always enough to save for retirement; you may also need a well-formulated plan. Calculate what you expect your living expenses and savings to be when you retire. There’s a difference between living comfortably and lavishly. You’ll likely need to make some cuts so that your money will last you through your golden years. Once you know how much you’ll need, create savings goals and develop a plan for how you will achieve them.
Don’t withdraw early
You never know what life will throw at you. While you may encounter unexpected medical bills or rising debt, it’s important to not prematurely withdraw funds from your retirement savings. Not only would you be taxed on what you take out, but you could also face a penalty for the early withdrawal. You should have a separate contingency fund to help cover the cost of emergencies and things you didn’t plan for.