Whether you’re 20 or 55, saving for retirement is a wise financial strategy to allow you to live a comfortable life without having to work for a steady income. Retirement is a point in your life when you’ve reached the age to settle down; you put in the time, and now it’s time to reap the benefits. Whether you’re retiring early or at the traditional age of 65, here are key things to remember when saving for retirement.
Evaluate Your Retirement Needs
Retirement is expensive, and most people’s retirement doesn’t look like traveling to Hawaii for a two-week excursion. To live a comfortable life after retiring, you need to plan out your expenses beforehand. Evaluate your lifestyle now and calculate how much you spend on bills, necessities, upkeeping, and other costs you may have every month. After that calculation, evaluate how much you need after retirement to keep up with that lifestyle.
Tip
Remember to think about health-care options and costs as well!
Start Saving As Soon as Possible
There’s no deadline for when to start or stop saving for retirement. You can begin as early as 16 and as late as 58; as long as you make an effort to save for retirement, that’s all that matters. When saving for retirement, we recommend opening a SIMPLE IRA and making yearly contributions toward your retirement. The current contribution limit is $6,000 a year, so if you contribute at least $100 a month at the age of 25, imagine how much you’ll have at 65!
Know Your Employer’s Pension Plan
If your employer has a traditional retirement pension plan, it would be best if you knew what the plan covers and how it works. Ask to see your benefit statements to what your pension is worth. Knowing what will happen to your pension benefit if you ever change jobs is vital. Also, ask your spouse if you’re entitled to any pension benefits from their plan.
Most Importantly: Don’t Touch Your Savings
The most important thing to remember when saving for retirement is not to touch your savings. When you withdraw from your retirement savings now, you will lose interest, principle, and potentially any tax benefits. Some companies will charge you a hefty fee if you withdraw early. If you change jobs, switch your retirement savings to your IRA or new employer pension plan.
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