Saving For Retirement The Easy Way
When many people think about saving for retirement they think it is too complicated. It can be, but most of the time people are over-thinking it. Saving for retirement doesn't have to be hard, it doesn't have to take a lot of time, and ideally you shouldn't have to think about it much. There are plenty of ways to make saving for your retirement easy.
- Start early. The earlier you start saving for retirement the less of your money you will have to invest. This is the benefit of compound interest and all. The way I see it, the less money I have to put in, the easier it is for me in the long run.
- Go through your employer. This is probably the easiest way to save for retirement and it can really benefit you if your employer matches your contribution. Usually this involves a few pages of paperwork when you start working. If you start contributing to a retirement account through work as soon as possible then you likely won't miss the money you are contributing. Many times the money comes out of your paychecks before taxes, so you are getting some extra benefits there.
- Make it automatic. I have found this to be the best option for us. A few years ago I just knew that if I didn't just go ahead and start an IRA with an automatic deposit then I would never really have the money to contribute. I opened one with a monthly debit from my checking account and have honestly never missed the money. It is so ingrained in my budget at this point that I don't even think about it. Had I opted for contributing whenever I had the extra money though, I am pretty sure I would never have had any extra money.
- Open an IRA or a Roth IRA. It will take some time to get this set up, but it shouldn't be that hard. A Roth IRA is one of the best tools for saving for retirement because the money invested grows tax-free. Usually the money is invested in mutual funds, not individual stocks, so pick one that fits with your risk factor and then you don't have to think about it very often. The money will just accumulate.
- Make it a priority or pay yourself first. I am sure you have heard this one before. It is true though! Why should your retirement - how you are going to pay the bills when you quit working - be pushed to the end of the line? Why should saving for retirement be the lowest on the priority list? It shouldn't! When you make out your monthly budget put yourself at the top. For us to do this we had to make it automatic, so take that step and just do it.
- Have a plan (and stick with it). A great way to boost your retirement savings is to add large chunks of money to your retirement accounts on top of smaller monthly deposit. If you get quarterly or year-end bonuses, or even a large tax refund then have a plan for putting some of that into your retirement savings. Because this is a bonus you won't miss it at all. Decide on a percentage or a dollar amount to be added to your retirement account and stick with it! Maybe it is 10% or maybe it is $1000 - whatever you decide don't talk yourself out of it when you finally get the money.
Setting up retirement accounts might take some work initially, but once they are up and running it should take very little of your time or mental energy. This makes it very easy in the long run! You don't need some fancy financial planner and you don't need to micromanage your account and make a lot of changes. Just set up something simple like a ROTH IRA or a Money Market Account and make the deposits automatic. Look at your year end statement and determine if your retirement account is still meeting your needs and make adjustments at that time. When it comes time to retire you will thank your younger self.
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