Saving for retirement can be hard when retirement still feels like it is decades away. It might even feel unnecessary to some, but it is best to always look towards the future to make sure that you can live comfortably in your golden years. Saving money doesn’t have to be hard, and we have a few tips that can make a difference in the long run.
Check Employers for 401(k)s
An employer-funded 401(k) is probably the easiest way to accrue free money just for showing up to work. A 401(k) is a program for employees to save for retirement often with help from their employer. It acts as a savings account for any money you make from stocks, bonds, and the money market. Employers sometimes contribute a set amount for every dollar that you earn. A 403 (b) and 457 are similar and are for public education organizations and non-profit organizations.
Open a Traditional IRA or Roth IRA
Individual retirement accounts can be a great way to supplement Social Security especially if your employer 401k program isn’t lucrative enough for you. Traditional IRAs are different from Roth IRAs based on withdraw penalties, tax deductible contributions, eligibility age, and maximum contributions. Do some research and decide which one will produce the highest benefit for your lifestyle.
Maintain a Budget
No one likes going on a budget, or having to reduce their lifestyle to compensate for something that’s in the far future. Have you wanted to kick a bad habit? Do you drink too much caffeine, eat too much sugar or indulge in too much alcohol? Stop and think about this: just reducing your grocery bill by $20 a week can help you save over $1,000 per year. That is 1/5 of the maximum amount you can contribute to an IRA. You don’t have to work more to make more, you just have to work smarter.
Collect old retirement credits
If you have been in the workforce for decades and switched jobs even once, you may have left behind retirement credits on accident. Track down old employers and contact their HR departments to see if you acquired a retirement fund while employed. If so, have them move it directly into your new retirement account so that you won’t be tempted to spend it on other things.
Don’t withdraw from the fund
The following bears repeating because it can be tempting to ignore: Do not touch your retirement fund. You are investing for your future, where there may be a large chance that you will have virtually no income after the age of 65 and therefore no means to live by if you do not start saving now. Plus, different retirement funds may have huge penalties for withdrawing money before your designated age. The cons outweigh the pros on this one.
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