Now more than ever it is important to begin saving and planning for your retirement as early as possible. As the price of living continues an upwards trend and life expectancy increases, the amount of money we can anticipate needing to retire comfortably grows as well. With threats to social security and volatile stock markets, investing wisely has become more important than ever. With these thoughts in mind, this article will be focusing on money saving tips for retirement.
How to Save For Retirement
It is no secret that the sooner you begin saving for your retirement, the better. While getting a late start in your saving efforts is certainly a hindrance, it is by no means a situation that you can not rectify with diligent efforts.
No matter what your age or financial situation, if you have not begun saving for retirement yet, the first step should be pretty obvious: start saving today!
Take a hard look at your monthly income and make a list of monthly expenses. Better yet, take 30 days to write down every single purchase you make – be it a soda, a tank of gas, or an electric bill. Once you finish, look for any extraneous areas you can cut back. Maybe instead of buying that expensive cup of coffee everyday, you can invest in a coffee machine and bank the extra money you save each month. The same goes for bottled water – you would be surprised how much money you can save by evaluating your monthly expenses and making slight modifications.
Define Your Retirement Needs
Many people go about saving for their retirement without considering how much money they may actually need. While it is always better to over-save than under, having a solid understanding of how much money you will actually need to live comfortably when you retire is pivotal to the retirement savings process.
Defining your “retirement number” is no simple task and there are many factors to take into consideration. Because of this, we recommend you contact a financial adviser or CPA firm such as Clayton, Paulk, and Associates, who can help you not only figure out how much money you will need to retire, but also help guide you on the right path to financial freedom.
Invest Found Money
While the temptation to spend “found money” – such as tax returns – on something fun (like a giant television or mobile device) is certainly hard to resist, we always suggest you take this money and store it in your retirement savings. Padding your IRA or 401k plan is always a great idea, especially if you have not maxed out your contribution for the year.
401k and IRA
If one of your company benefits is 401k matching, you should always try to contribute enough to take advantage of the match. Contributing to an IRA is also a smart choice, particularly if you qualify for a tax deductible IRA (consult a financial adviser or CPA to find out your options).