Retirement is something most people strive for, the reason they go to work, the overall goal of finally enjoying life. But, if you don’t know how to plan your money and start saving early, there might not be enough funds to keep you going in retirement. Saving for your post-work years is an important step in early adult life. Some people use 401ks, some fixed deferred annuities, and there are many more options besides. The key is to know how much you’ll need and how to reach that goal while you’re supporting yourself or your family on your salary.
Set a Goal
It can seem daunting to calculate how much money you’ll need forty or fifty years from now. Luckily, there’s an easy trick to set your retirement savings goal called the twenty five times rule. This means you can estimate what your post retirement costs will be each year, then multiple that by 25 and you have a reasonable savings goal. This also helps to ensure you have enough money to last the rest of your life so you can do all the things you enjoy. The next step is determining how to reach this goal by considering how much of your monthly savings need to go toward retirement.
Open an Account
As mentioned in the introduction, there are a plethora of retirement account types, so you’ll need to find the one that fits you best. Some plans are sponsored by companies for their employees, and others are meant for the self-employed or as supplemental plans. The key is to get your money working for you by investing in an account that will generate more interest than a typical bank savings account. You can do this by putting your money in stocks, bonds, or mutual funds. You’ll want to carefully consider how much risk you’re willing to take and then decide which type of investment fits your needs.
Build Your Nest Egg
As you move through life, remember to continue increasing your contributions to these accounts. If you get a raise at work, you can put the extra money into the retirement. If you get a large tax return, you can put that money in your retirement account to. Keeping your savings goal at the front of your mind is a great way to reach it!
Saving for retirement is a big task some people forget about, but if you want to have a happy and stress-free retirement, it’s the best thing you can do.