Planning for retirement is much easier when you start early. But what if you didn’t? While it’s true that the longer you put off saving, the less time your assets will have to grow, it’s still possible to reach your financial goals.
But continuing to believe that you have plenty of time to save for retirement isn’t going to work for much longer. Just like many people avoid the doctor’s office because they’re afraid of what they might find, some people just avoid looking at retirement savings. This can be dangerous.
If you want a secure future, and a chance to stop working at some point, you’ll need to put some money away. Even if you haven’t started saving yet, you can get on the right track to achieving your goals through some deliberate planning and action.
1. Max Out Your Contributions
If your employer matches your 401(k) contributions up to a certain point, take full advantage of that benefit. It’s free retirement cash. Beyond this, you should also max out your IRA contributions each year.
2. Look Beyond Your 401(k)
You should certainly max out your 401(k), but there are other options. Be sure that you take advantage of a Roth IRA and investigate how you might be able to access the cash value of a life insurance policy if this is something you own.
3. Invest for Income
Many people invest in the market with an eye towards growth, which is a worthy goal. But you can find some stable investments that not only increase in value but also generate income in the form of dividends. Over time, you can reinvest those dividends to grow your savings faster, but then use them for income in retirement.
4. Automate Your Savings
Have you ever heard the saying, “pay yourself first?” This applies here. And the best way to do this is by setting up bi-weekly or monthly automated contributions to your retirement savings so that it grows long-term.
5. Live Below Your Means
As your income goes up, it might be tempting to buy a bigger house or a nicer car, but you’ll be better off saving that money instead. You likely did just fine before the raise, so begin putting more aside for retirement. Ideally, saving as much as 40% of your earnings will get you to the finish line the fastest.
6. Get Some Tax Advice
There are plenty of ways to take advantage of (not exploit) the tax code to your benefit. For example, you can use a health savings account (HSA) to use tax-free money for qualified healthcare expenses and lower your overall tax burden.
7. Eliminate Credit Cards
You’ll reach your savings goals quicker if you aren’t wasting money on high-interest debt. If you’re not paying off your credit card balances each month, this is certainly something you’ll want to address as you work to cut costs.
Are You Ready to Start Saving for Retirement?
Thinking about retirement can be stressful, but it would be a mistake to put off the inevitable. This might also be a good time to speak with a financial advisor that can help you figure out how to maximize your retirement savings in the coming years.
Contact Aura Wealth Advisors to start a conversation about your retirement goals and learn more about how our services can help.