If you want a comfortable life in your old age, you need to start saving up for your retirement. Whether you’re on the wrong side of 40 years or just starting in your 20s, you shouldn’t despair! There are some easy ways to work on getting that substantial nest egg to last you in your old age.
1. Make an Estimate of Your Future Needs
The first thing you need to do is to calculate how much you will need to have a comfortable retirement period. Starting with a ballpark figure can be a good place since that can make your plans more focused. Some online retirement calculators can help you out.
2. Figure Out Your Income
Once you have a clear picture of what you will need in your retirement period, you can also calculate how much more you will need. Calculate your different income sources and see if they are enough to get you to the amount you need. You can try and look for Social Security benefits for old age, check if you have any pensions, and check the expected value from your 401k plan.
3. Using Your 401k
If your company is giving you a 403b or 401k, then you should sign up as soon as possible. You should max it out by contributing as much as you can, according to the law. You will be able to use your tax savings on the deductions too. If your employer is matching your contribution, you should go for the maximum contribution so that you don’t lose out on any money.
4. Try Roth
If you are still not making enough income, you can begin to contribute via the Roth IRA as well as your regular retirement plan. This contribution will not be deductible in your taxes, but the earnings in retirement years will be free of tax.
5. Invest in Diverse Income Sources
You have several decades to your retirement, even if you’re about 45-50 years. You should try different methods like mutual funds and proven stocks to expand your wealth.
6. Consider Downsizing or Relocation
If you are currently living in a high-cost area, you should consider moving into a cheaper area and saving the money for your retirement. If your kids have left home, but you are still living in a big house, you should sell it and move to a less expensive and smaller house that suits your needs better. You will be able to save on your mortgage payments as well as bills for cooling, heating, maintenance, property taxes, and insurance.
Thinking about your retirement from earlier on in your life can be a great plan. There are ways to increase your retirement savings through the simple methods above.