There was a time, not long ago, when Americans longed to retire. After decades of hard work, they were finally going to enjoy themselves. But as life expectancy and the cost of living continue to rise, fewer people can expect a smooth retirement. In fact, up to a third of the people who reach out have no savings to speak of. Consider the following retirement planning tips to help reverse this worrying trend.
1. Start saving today
According to government data, more than a third of Americans rely on Social Security as their main source of income. While the popular safety net is certainly useful, it won’t cover the costs of unexpected events. For this reason, it is imperative that all retirees have something in the bank to cover the inevitable shortfalls. Whether you start saving a hundred dollars a month or a single sawing, it’s important to do it religiously, for many years. You’ll be surprised how much money you can accumulate with regular contributions and interest payments.
2. Reduce spending
Even if you don’t have a lot of waste, there are always ways to cut back without much sacrifice. Comparing cheaper auto, health and life insurance can certainly help lower your monthly bills. You should also take a look at your phone, internet, and cable rates. Last but not least, you can search for ways to save online. Whether it is to buy food, clothes or school supplies, there is no shortage of offers on the Internet.
3. Contribute to your 401(k)
If your employer offers a 401(k) plan, and most do, you should participate. These plans not only offer greater savings potential than regular bank accounts, but also give your employer the option to match your contributions. While not all bosses are as generous, a growing number of them are.
4. Open an IRA
Specifically designed to help you build your savings, the right IRA can work wonders. For most workers, a traditional IRA allows them to make tax-deductible contributions. Plus, investment earnings can also grow tax-deferred until withdrawals are made much later. There are also Roth IRAs that are funded by after-tax contributions, allowing for tax-free earnings and withdrawals. Because these accounts can be complex, you should talk to a retirement planning professional to find out which IRA is best for you.
5. Delay in Social Security
The longer you can defer receiving Social Security payments, the more you will receive in the future. Even if it’s only a year or two past the earliest age you can start receiving benefits (62), you’ll still get a nice increase in your monthly check. In fact, you can defer payments until age 70 and receive more income in your later years. Currently, full retirement can be obtained from the age of 67.
Follow these simple retirement planning tips to help you prepare for your golden years.