How to Save for Retirement

Planning for Retirement 8 tips

Some of us are planners and plan and some of us are not planners and live in the moment. Regardless of the type of lifestyle you choose or live, it is never too early to think about retirement and the future. More and more people are living in the now not waiting to do the things they want in retirement. These days life seems so uncertain and unpredictable. It is never too late and to early to start thinking about the days when you will no longer be working. Social security as many believe may not be around for younger generations, however, I debunk this fear and although social security is great, it is not intended to be the only source of income. So, start planning for retirement now. Below are some ways you can start saving for those golden years.

1) Start today – any amount will do. The goal is to grow the retirement funds by investing those funds. You can put as little as $20 to $100 every pay period. The goal is to be disciplined and to not use those funds. Too often I see people dip into their retirement funds before age 59 1/2 and end up using their retirement as emergency savings. You should have a separate account for last minute emergencies.

2) Does your employer offer a 401k account? If so, take advantage of it! Especially if they match and or contribute towards it. Learn the difference between a traditional IRA and a Roth IRA, know what tax bracket you are in now and what tax bracket you will be when you are older.

Tip: Set up automatic withdrawals for everyday savings and for retirement savings.

3) More and more of us are working as independent contractors. Working for yourself has many pros and cons, but did you know you can also contribute to a retirement account without being employed by an employer? Many brokerage places such as Fidelity offer retirement plans for the self-employed.

4) Catch Up Contributions Age 50 and older – If you haven’t started saving at all for retirement and you are 50 and older, don’t worry! Once you turn 50 you can contribute more than the normal contribution limits. Take advantage of this and max out the contributions. Don’t forget to estimate what your social security may be at full age retirement. IRS has updates on retirement contribution limits for 2022.

5) Review and Budget – There are some expenses we tend to set it and forget it. I recently wanted to lower my car insurance and figured I was paying too much. I was able to save over $50 a month by getting another quote from another car insurance company. Things like auto insurance, cell phone bills, homeowners’ insurance, renters’ insurance, and health care are some of the items we tend to pay for without considering we maybe able to find a cheaper rate.

Budget apps

6) Goal Setting – This applies not only to retirement savings but also everyday savings. If you are unsure what age you want to retire, start thinking about it now. What kind of bills are you going to have? How much do you need monthly to live on? Many retirees are moving overseas and finding cheaper living. However, this may not be for everyone. So, start thinking about what you will be doing and how you want to spend that time. Set milestones and start working on a 2-3-5-year financial plan.

Tip: Set a rewards milestone. For example: Once I reach a certain amount in my retirement or my savings, I reward myself. This could be anything from taking a mini vacation or buying something I really want.

7) Extra Funds – We live in a world where we are always hearing about the latest gadgets, the latest fade or toy for our kids. When you get a raise, or a bonus think about putting that money to work for you instead of spending it. If you don’t have a budget set one up now. Start simple and keep it simple. You will be amazed how quickly money can be saved if you stick to a budget. Those $5.00 to 6.00 lattes from Starbucks, ditch them! Figure out how much money you are spending on coffee or take out. Limit the expense to a certain amount each month and put the extra savings towards retirement.

8) Don’t take social security too early! I see this all the time and I cringe because if you are still working and are earning a good amount of money. Why on earth are you dipping into your social security? Keep in mind as you age you will not be able to work. Retirement funds are also for the time when you no longer can work. When you take your social security early before the full age of retirement it means you are reducing what you will have in the future an when you may really need it.

There is a lot of fear and misunderstanding on how the social security system works. To learn more in depth I suggest reading this book. Social Security Secrets by Steve Garfink.

WE hope this inspires you and you start saving today! 😊

- He who buys what he does not need, steals from themselves and their future.