It can be difficult to get a firm grip on your finances when you’re employed, but things can become much more difficult when you don’t have a job. A person would rightly be a little bit worried if they suddenly lost their employment.
Yet, while it won’t happen suddenly, it’s just a fact that you will be without a job at some point. It’s called retirement! Nobody wants to work longer than they need to; they want to enjoy their golden years.
However, it’s not as if you can just leave the workforce and automatically begin enjoying the good life. You need to have retirement savings that’ll ensure you can continue with a high quality of life.
People often underestimate the amount of money that one needs for retirement. As such, it’s important to first, figure out how much you need, and second, make sure that you’ll have enough when retirement rolls around. In this blog, we’re going to look at some useful tips that’ll ensure you have enough money.
The earlier you start planning for your retirement, the easier it’ll be. The logic makes sense. The more time you give yourself to reach a goal, the easier it’ll be! There’s no age that is considered too young to begin planning for your retirement. People even begin when they’re in their twenties. Of course, if your twenties have come and gone, then don’t stress. While the best time may have twenty years ago, the second best time is right now. So get started — you’ll find that just getting the ball rolling will give you a massive confidence boost.
Increase the Savings
So what’s the right approach to take? There are many things that you can do to boost your retirement savings, many of which will be discussed in this article, but at the core, you should focus on simply directing money to a savings account.
This won’t only increase the money you have in retirement, but it’s also the most straightforward. All you need to do is set up a direct deposit so that a certain amount of money automatically gets directed to a savings account each month.
You can put in any amount that you feel comfortable with, but it’s sometimes worthwhile pushing things a little. Could you increase the amount you’re saving by 10-15%? It’ll make a big difference.
Hopefully, your employer will offer a 401k, which streamlines the retirement savings process. Some employers offer an employer match system, by which they contribute to your savings pot. There are companies that’ll offer to contribute 50% of whatever the employee contributes.
And this is exactly as good as it sounds — it’s free money, so you’d be crazy not to take it. There are usually some conditions. For example, you might have to contribute 5% of your annual income to the fund. If you do that, then your employer will throw in 2.5%, which can add up to a significant amount of money when multiplied by many years.
Where You Put Your Money
It’s not just about the amount of money that you’re saving, but about where you’re putting that money. You could keep all of your retirement savings in a bag under your mattress, but that won’t be the best place. Instead, it’s best to look at putting it in a place that offers compound interest, which essentially means that your money will breed even more money.
To see how much of a difference this can make, you can use this simple interest calculator. If you have a large sum of money and put it in an account that offers a good annual interest rate, then your money could grow significantly — without you having to do anything at all.
It’s also a good idea to look at making investments. The word ‘investing’ can sound scary to some people, but it shouldn’t be. It only becomes scary when you’re throwing all of your money behind a risky investment, which, of course, you should never do. Investing isn’t a way to get rich quick, it’s a way to slowly grow your money over many decades.
If you don’t know where to start, then you can speak to a financial advisor, who might just manage all of your money for you for a fee. There are also plenty of good robo advisor programs out there that can grow your money slowly and steadily.
Set a Goal
While many people start off with the best of intentions when it comes to their retirement savings, it’s just a fact that motivation can dwindle. It’s all too easy to direct some of the money reserved for your retirement towards something else, such as a new car or vacation. One way to stay on track is to set a target.
You’ll find that it’s much easier to stay focused if there’s something to aim for, rather than just having a vague goal to “have money for retirement.” This is something that can grow and develop over many years, too — you might decide to increase your target if you’re easily on course to meet your current goal.
Your Current Housing
It can be a little dispiriting to start a retirement savings account from zero. You’ll know that you have an uphill battle. If you can start it with a large lump sum, then you’ll feel a lot better, plus the pressure will be off.
One way to do this is to look at your current housing situation and see if you can change things. Could you downsize? Could you move to a cheaper part of the country?
If these are options, then it’s worthwhile exploring. Just by making a lifestyle change (which won’t negatively affect your lifestyle), you could find that you can start your retirement fund with $50,000 or more.
Build an Emergency Fund
While you might be able to add a decent amount of money to your retirement when everything is going well, things might be more problematic when you hit difficulties. And as anyone who has lived long enough can tell you, there will always be emergencies in life that require money.
One way to avoid dipping into your savings is to build an emergency fund. This is money that’s set aside for dealing with unexpected expenses. If you never need it, then you never need it, but you’ll be thankful that you took the effort to build the fund if you do.
Build a Side Income
You don’t have to rely solely on your primary income for your retirement fund. You can also build a side income. This sounds complicated, but in 2021, it couldn’t be easier — there are literally hundreds of ways to build a side income, some of which only require a minimal amount of effort and start up cash.
All the money that you earn from this side hustle can go directly into your savings account — this is an excellent way to build up your savings account quickly.
Get Rid Of Your Debt
Finally, take a look at getting rid of any debt that you may be carrying. This is something that can seriously diminish the amount of money that you’re able to save. Instead of adding money to your retirement fund, you’re just paying off the people that hold your debt, in the form of interest, and that’s not good. The sooner that you pay this off, the sooner you’ll be able to start taking the reclaimed money to your retirement fund.