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Retirement only seems to concern seniors, but it is certainly not the truth. According to a recent survey, 82% of American workers feel that they will have more difficulty securing their financial security than their parents. And honestly, they may not be too far from the base. While many Americans over the age of 66 depend on social security benefits to manage their finances, this option may not be an option for those who reach retirement in the next 15 to 20 years.
For this reason, it is important to take the necessary steps to plan for retirement now. Of course, it's always a good idea to meet with a financial advisor to develop a retirement strategy that will be more beneficial to your particular situation, but in the meantime, here are some ideas to start right now to prepare for your retirement.
Write your goals
First: Before deciding on an investment strategy or the amount you will need to live comfortably, imagine what your life will look like after retirement. Note where you might live, what you will do, and how old you want to reach this goal. Do you want to spend your free time traveling the world? Is your goal early retirement? Try to be as specific as possible, then put a price tag on it. The number may be a bit intimidating at first, but it's best to be realistic about your goals. This will determine how aggressive you will be in your savings and investment strategies.
Start now, even if it's small
Most of us have probably heard this from parents, teachers or older colleagues, but starting to save while you're 20 has a significant impact on what you'll save later in life . However, do not worry if you are between 30 and 40 years old and have not started – there is still time to start investing, but the sooner you start and the better you will be. Some people think that their standard of living will decline in retirement, but that is not necessarily the case. In fact, the earlier you start, the more potential you have to enrich your lifestyle after retirement.
Open a 401k
If your employer offers a 401k, this can be a very simple way to start your nest egg. Many employers even offer a dollar for dollar corresponding to a certain percentage of your income, usually 6%. It is free money for the future. Another great thing about traditional 401k plans, at least in the beginning, is that money is deducted from your pre-tax paycheck, which means you are actually saving tax while saving for your future. You will have to pay taxes when you withdraw money from your traditional 401k (that's different for roth accounts, which are less common), but for a lot of people did everything while working a job on time full.
Open an IRA
If your employer does not offer a 401k package, launching an IRA is another great way to save. Although you can not benefit from the matching contribution guarantee often offered with a 401k, the same tax principles generally apply to a traditional IRA. However, if you do not want to pay tax on your savings after retirement, you can choose an IRA and pay it in advance. If you have the means, you can open an IRA in addition to a 401k to maximize your savings.
Set up an emergency fund
The disadvantages of retirement savings plans such as 401k and IRA are the penalties badociated with withdrawing money before you turn 59 and a half. That is why having a cash reserve with at least 3 months of income can be of great help when it comes to unforeseen expenses. Another benefit is to eliminate the need to go into debt. If you need a major repair of your car or if an unexpected medical bill occurs, having an emergency fund can be convenient and comforting.
Saving for your future does not have to be a painful process. Putting very little money into your 401k or IRA from the beginning can make all the difference in how much you will have invested as retirement returns. At the very least, start contributing as much as you can to a traditional savings account and do your best not to draw on it over time.
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