Do not leave for tomorrow that what you can do today. Retirement savings is often put off until later. We live under the false notion that we still have plenty of time to save. It is never too soon to start saving for your retirement. If you are closing in on your late forties, you may already be crucially late for planning your retirement savingsIf you are in your fifties, your retirement is more imminent than it may seem. There are my two cents worth of the Top 3 Retirement Savings Tips that you should consider.
Planning Your Retirement Savings
In our article Retirement Preparations – Get Yourself Ready we have delved into practical reasons on how to prepare yourself for retirement. In this article, we are going to dive straight into the more fiscal aspects and what is necessary in order to arm your future with retirement savings.
#1 Financial Assessment – Are You Ready for Retirement?
In order to be able to do a proper financial assessment of your retirement savings you will need to prepare the following information.
- Your Current Income
- Your Income Tax Rate
- The Rate of Return on your current investments
- The projected income you will need to live comfortably during your retirement.
- Whether you are participating in a retirement plan – be it a private plan or a state plan.
Let us start bottom to top!
Your Retirement Plan
If you are on a retirement plan you need to identify how much money you will be receiving from this plan once you retire.
Government plans are the least safe to forecast. If you are still young enough, there is no guarantee that state plans will still be in force – whichever part of the world you live in. Retirement age is constantly being extended by governments. Especially those with sever budget deficits. Therefore, if you are relying on your retirement savings and income from a government pension source, you may want to rethink your strategy.
Your Projected Lifestyle and Spending Habits
Next is how are you projecting to live during your retirement. Your current spending may give you an indication of what your future requirements are going to be. Granted that some expenses will be reduced. You may not need to visit the dentist with the kids any longer, however, you will have to factor in that the older we grow, our medical bills are also going to be higher. You will also need to hedge against inflation.
Independent Income for Retirement Savings
If you are currently on a savings plan, or you have taken our an IRA (Individual Retirement Account) you will need to know what kind of return you will get on retirement. This is a very crucial part of your retirement savings assessment process.
Your Present Income and Income Tax Rate
This important part of your assessment is going to help you see whether you are in a position to take action for a better retirement savings plan. Once you have assessed all of the above, you will soon realise whether you will have a surplus or a shortage of income planned for your retirement savings. You will need to decide at what age you are planning your retirement. If you list down all these pre-requisites when making your assessment, you will be able to realistically decide whether you can carry on with your lifestyle as it is, or whether you need to make drastic changes.
If You Plan Your Retirement Savings Early Enough – There is No Cause for Panic
If your personal financial assessment is indicating that you are in a shortfall on retirement savings, here are some tips for lifestyle changes you may gradually need to consider.
- Cutting back on the superfluous. This may sound easy enough, but is actually not easy at all. The best way to cut down on the “extras” is to keep a list of what you are spending on a daily basis. It is probably the best eye-opener. Cutting down on the extras is easier if you identify what you can do without. The pennies saved on the stuff we can live without, can go towards additional savings. Starting from as little as $20 a week – which amounts to $1040 per year at a compound interest of 4% will sum up to $32,206 in twenty years. Just $20 a week!
- Consider adding your income with a part-time job. You can have additional skills like trading online or blogging. Both can be done from the comfort of your home. Making Money Online is probably one of the easiest way to supplement your income. Online business can easily generate anywhere from $10-$50k per year of income that can go towards retirement savings.
- Increase and match your contributions. If you are on a 401(k)plan,
then consider adding your contribution to match that of your employer. Matching maximum contributions under salary deferral programs will mean that you will end up with maximum income.
- Look into your personal IRA. Gold is considered to be a very safe option for Savings – Request your Free Gold IRA kit – without obligation – now and learn how saving just an additional $10k a year will accumulate to half a million in twenty years.
- Do not Procrastinate! The longer the time you allow to escape you, the more drastic your lifestyle will have to change to accommodate your retirement savings.
# 2 – Is it High Time to Re-Assess Your Current Portfolio?
What strategy have you adopted with your current retirement savings portfolio? If you are still young and a high-income earner, there is no harm in allocating a portion of your portfolio to stocks and shares. Stocks and Shares give a high rate of return, but they are also high risk. If you are still young, willing and able, you can afford to take measured risks with your portfolio – because the potential return can be high. If you loose some, you are still strong enough to recover from it. If on the other hand you are already close to retirement age, you definitely need to take a far more conservative approach with your investment portfolio.
Invest in a safe and good financial planner. If you are not sure what a financial planner is, you need to ask for safe advice. A financial planner is a qualified investment professional. Such planners will assess your status and set programs to achieve your retirement goals. The will take into consideration your tax planning, your risk management, and how to allocate your assets. Ensure that you are trusting your future in safe and legitimate hands before committing to a “Financial Planner”.
#3 Kill Your Credit
Consider paying off high interest debts as soon as is reasonably possible. High interest debts impact your ability to save. They impact your total quality of life. If need be tear up your credit cards. Credit card debt is a silent killer. You flash your plastic card and receive instant gratification. The long-term effect of high interest credit cards can negatively impact your ability to reach your goals for retirement savings. If you are finding that you are unable to meet with your monthly repayments, consider paying off high-interest loans by taking out a lower-interest long term loan. One important thing that you need to consider when doing this exercise is how it may effect your credit rating. Again this would be a very important retirement savings tip that you will need to discuss with your financial planner.
Retirement Savings Tip – Conclusion
Although this article is by no means exhaustive it does cover the more salient tips for investment and retirement savings strategies. There is nothing more satisfying than keeping your savings on track and knowing that you can have a safe financial environment for your future. If you get sidetracked do not lose heart. If you are on a constant reminder on how important it is to safeguard your future, you will always catch-up and make good for lost months. Would you like to learn how to trade without any financial risk? Start now by learning how to trade. Our “Secret Trader” is an online course that is designed to take you from a complete novice to professional trading in easy and simple steps.
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