Planning for your retirement is important whether you are young and just starting your career or have worked for decades and are close to retiring. Building a financial cushion can provide the security you need while also enabling you to pursue the type of retirement lifestyle you have dreamed of. If you want to be well prepared for your later years, consider these top ways to save for retirement.
Start Right Away
There is no better time to start investing than today. The longer your money can remain invested, the longer it has to grow. Additionally, the law of compounding growth can make a substantial difference. Simply put, as your investments generate earnings, those profits can be reinvested to generate additional earnings. This repeating cycle ensures that a small amount of money invested early can grow to a much bigger sum by the time you retire.
Additionally, when you invest early, you can afford to maintain a higher-risk portfolio. History shows that volatile stocks, while risky in the short-term, can outperform other investments in the long-run. Having time on your side allows you to take advantage of this.
Invest in Your 401(k) at Work
When employers offer 401(k) plans, you have the option of contributing part of your pre-tax income. Because the money is taken directly from your paycheck before it is taxed, it’s an easy and painless way to invest.
You may need to change careers to reach your financial goals and gain such benefits, and it is usually advisable to get your specific training from a reputable institution. As time is essential regarding receiving the proper training, it may be challenging to be physically present at an institution to attend classes. Luckily, several reputable universities and colleges offer online nursing courses ranging from BSN to DNP programs to equip you with the right skills and knowledge.
Take Advantage of Matching Contributions
In addition to offering 401(k) plans, many employers offer to match your contribution up to a certain percentage. If this is the case with your company, you should aim to contribute at least as much as your employer is willing to match. For example, if your company matches up to 5% of your salary, you should invest at least 5% to take full advantage of your company’s contribution.
Invest in an IRA
Whether your company offers a 401(k) plan or not, you should consider setting up an individual retirement account (IRA) with a brokerage firm. With a traditional IRA, you can contribute pre-tax dollars that can grow tax-deferred until you withdraw the money during retirement.
Another option is a Roth IRA. With this type of investment, you pay tax on the money up-front, but all future earnings are completely tax-free, even when you withdraw the money. This type of investment is especially beneficial if you are young because your tax savings can be substantial over the long-term.
Compensate for Lost Time
While it’s ideal to invest in your retirement from an early age, many people miss that window of opportunity. Nevertheless, if you are close to retirement age and haven’t started saving yet, don’t despair because it’s never too late to start.
There is a provision in the law that allows people 50 years of age or older to make catch-up contributions in retirement investment accounts. Basically, older adults are eligible to invest the standard contribution maximum plus an extra catch-up amount. Currently, the catch-up contribution limit is $1000 for IRAs and $6,500 for 401(k)s.
If you are looking forward to your retirement years, you should make the necessary preparations to ensure you are financially prepared. By following these guidelines, you can increase your financial security and be better positioned to enjoy your golden years.
- Here are the Reasons Why You Should Write a Book - January 21, 2022
- Moving With Kids Isn’t Easy, But Let’s Make It Less Stressful - January 21, 2022
- Do You Have Varicose Veins? Here Are Some Treatment Options - January 18, 2022