It’s truly never too early to start saving and planning for retirement. A person’s worst nightmare is getting to retirement age and not having enough money to cover bills, medication costs, and other various expenses that can add up each month. Having to job search in your 60’s can be an uncomfortable position to be in, so if you don’t have a plan for saving for retirement, it’s time to put pencil to paper. It is undoubtedly frustrating trying to save money when you can’t even save enough money for a decent vacation, car repairs, or a down payment for a house. With the retirement planning help from Aureus Wealth Management, you can be confident that your retirement years can be spent in ease.
The earlier you start planning and saving for retirement, the more comfortable you will be when it comes time to shut the door on your working years. Saving even just a little bit each month will allow compound interest to do its job and grow money for you. Saving a little bit each month for a longer period of time will end up saving you more money than saving a little bit more for a shorter period of time.
A majority of employers will offer a 401(k), and it is definitely advantageous to contribute to this plan. The money that is put into a 401(k) plan is taken directly from your paycheck and is pre-tax, so the amount of your paycheck won’t drop by a significant amount. Keep in mind, 401(k)s typically begin by taking out three percent of the entire amount. If you can afford to contribute more, you will see that difference in the long run.
Employers Who Match
Many employers will match a certain amount or a percentage of an amount that you contribute to your 401(k) plan. By contributing your own $1000, you employer may contribute the same amount of a percentage of the $1000. It is essentially free money and can make a big difference in your overall retirement fund.
There are two options for IRAs, or Individual Retirement Account, traditional IRA, and Roth IRA. The main difference is how they are taxed, or not taxed. With a traditional IRA, contributions are tax-free for both state and federal tax returns; however, the withdrawals on a traditional IRA are taxed. Contributions for a Roth IRA are taxed as usual, but withdrawals are typically tax-free. Which one you choose depends on your income and how and when you want to pay taxes on your money.
Keep Track of Spending
The hard thing about trying to save is that money has a tendency to just disappear. Creating a budget and sticking to it will help you see where your money is going. There are online tools and budget worksheets that can keep track of how you are spending for you. When you have a good handle of a budget, you can see what areas where you can spend less and save more.
Save Extra Money
You might be rolling your eyes at this one, who has extra money? However, if your employer has company bonuses, or if you receive a raise, don’t think of this money as dispensable, even if do really want that new pair of shoes or new kitchen appliances. This money especially raises, can be invested as a greater contribution towards your 401(k) plan and will pay off as a greater retirement fund.
Keep in mind, knowing how much you need to retire depends on what kind of lifestyle you plan on leading when you do retire. If you want to spend more time traveling and purchasing large items, it may be a more costly retirement. Starting to save for retirement now will get you in the habit of living frugally so that you can enjoy retirement years traveling in peace. Planning for retirement can be a full-time job, that’s why Aureus Wealth Management is here to help. We know how challenging and frustrating it can be to save money, but we also know how rewarding it can be when you can enjoy the money that has been saved. Contact us today to start planning.