It’s estimated the average American spends 20 years in retirement, and perhaps more with breakthroughs in scientific and medical progress. Here are a few ways you can save and spend wisely to maximize your retirement savings:
As early in life as your income allows, invest in an IRA or a 401(k). Even if you have already opened one, invest more money in your retirement account. Your retirement funds actually aren’t taxed until that money is taken out of your retirement account. Contributions to retirement funds can be made as late as April 15th, and you can deduct your IRA savings up to $5,000 on your tax return (this does not include catch-up contributions for those 50+) and $16,500 for a 401(k). Not only will you be giving your tax refund a boost, but you’ll be bolstering your retirement fund for the future.
Ideally, you want to be putting away at least 10-30% of your annual income a year towards your retirement plan. This gives you years and years to accumulate savings instead of panicked attempts in your late 30’s to 40’s. Give yourself the benefit of the doubt by planning ahead.
Diversify your investments. Whether you have a Roth account, stocks, bonds, or any other kinds of investments, diversity is good. Even if one of these ends up losing value, you have your savings allocated and appreciating elsewhere, so even if disaster strikes, you’ll have your money when you need it.
Make sure you commit yourself to setting aside a certain portion of your money every month and get in the habit of saving. Even if you aren’t investing that money, having assets to play with can help you put away money for retirement, emergencies, or even for a rainy day.
Go over your pension plan with your employer and look into your upcoming social security benefits so you know what to expect when it comes time to retire. Don’t let yourself be surprised!
Sell assets you can no longer maintain yourself or routinely have serviced- If you have a large home with just you and a spouse living there, you may be bleeding yourself on utilities and upkeep. Living in a home you can’t physically or financially maintain quickly becomes a burden- weigh your options.
With proper preparation and a little discipline, you and your family can give yourself the best head start you can into your retirement. Remember that limiting superfluous purchases can also help your money last, but retirement is also a time to enjoy! Be sure to plan in some room for luxury, too!