Whether you’re 20 or 40, it’s never too early or too late to start saving for retirement. Because it’s a new year, what better time to really focus on how to best set yourself up for when you retire?
While we all know the importance of saving for retirement, there are millions of people who have very little retirement savings. Ensure you’re financially set in your later years by focusing on retirement now.
Keep reading to learn the ins and outs of how to save for retirement.
We all have dreams about retirement but, in order to live out your dreams, you’ll need to make a plan of how to get there. Take some time to think about what you wish to do in retirement. Do you want to purchase a house on the beach? Dreaming of spending time with your family and grandkids?
Whatever your happily-ever-after may be, identify what you want, and then set goals to achieve those things.
Start Saving ASAP
Once you’ve identified what you want your retirement to look like, it’s time to start saving! Putting your plan into motion starts with investing at least 10% of your gross income for retirement.
Start first by reviewing your employer’s 401(k) program. Most employers offer a 401(k) match. This means if you contribute 5%, your employer may match that same amount. This is free money that will make it easier to achieve your retirement goals.
If you reach the point of contributing the maximum amount into your 401(k), you can work with a financial advisor to open a Roth IRA. This is a retirement account that enables you to pay taxes on the money upfront. So, when it’s time to retire, you’ll be withdrawing this money tax-free.
The sooner you save, the better off you’ll be come time for retirement. Not only will you have put more years into saving, but you’ll also get the most from compound interest and earnings.
Maximize Your Investing Options
Another important part of retirement planning is to maximize your investing options by diversifying your portfolio as much as possible. Whether you have a 401(k), IRA, or both, there are four different growth stock mutual funds that you can put your money into. These include:
- Growth and income
- Aggressive growth
Because there are so many funds to choose from, it can be difficult to know exactly where to put your money. This is where an investing professional can really come in handy. This person will help to choose the best funds for your portfolio, based on your retirement goal, savings, and age.
Automate Your Savings
Once money hits your bank account, it can be hard to force yourself to then put that money into an account that you can’t touch for years. This is why it’s important to automate your retirement savings. Most employers allow you to make automatic contributions to your retirement account each time you get paid.
With an automated retirement savings plan, you’ll find that it’s easier than ever to prepare for your later years in life. At The People’s Federal Credit Union, we offer checking and savings accounts that allow you to transfer money into external accounts, including retirement accounts.
Want to learn more? Looking to discuss your retirement plan with a specialist? We’re here to help! Contact us today at (806) 359-8571.