Did you know that it’s often recommended that Americans save as much as between $1 and $2 million for retirement? These days, it seems like fewer and fewer people are hitting their retirement savings goals by the time they are ready to leave their career lives behind them. And with the cost of living increasing across the country, this is becoming a bigger problem for many Americans.
No matter where you are in your career, it’s important to start thinking about your retirement savings today. If you’re not sure where to start, you can begin by considering these five handy tips. Read through and find out what you can do to jumpstart your savings.
The Earlier You Start, The Better
Maybe you’re 24, you just landed your first full-time job, and the thought of retiring in 40 to 45 years seems distant and impossible. However, even if you’re still young and just starting your career journey, it’s still a good idea to start saving as soon as you can. Because of the power of compound interest, starting early means that you’ll wind up with a much bigger sum once you’re actually ready to take the leap and retire.
Know Your Options
Did you know that there are multiple different kinds of retirement accounts available to savers? A few of the options include:
- Roth 401k
- Roth IRA
Typically, 401ks are offered through your employer. They’re included in your benefits package or offered as a perk after working for your company for a while. IRAs are individual retirement accounts. You can set them up whenever you like with the investment broker or bank of your choice.
Need more help? Check out an online investing resource center for educational content.
Estimate Your Costs
Retirement costs likely won’t be the same as the day-to-day costs you encounter during young and middle-age adulthood. Maybe the kids are out of the house and earning their own income, but you might also have more medical or at-home care expenses. It’s important to start building your retirement savings with your likely expenses in mind.
As you approach retirement, it’s a good idea to estimate the costs you’re likely to encounter. And, once you have your costs tallied up, it’s a good idea to think about how to reduce them. That brings us to the next item.
Unless you’re a superstar gold-medalist saver, your income will likely decrease significantly once you retire. While some seniors can remain living in the same home they lived in before retirement, many others find it financially helpful to downsize by searching for an affordable home.
Downsizing often refers to opting for a smaller, more inexpensive home, but it can also refer to different lifestyle changes. Maybe that yearly trip to Europe has to become a once-every-two-years thing, or perhaps some of the luxury brands you’ve come to like have to be swapped for more sensible options. Ultimately, it’s up to you.
Work With A Professional
When all else fails, it’s a perfectly valid choice to work with a professional retirement planner. Retirement is a huge change; there’s no shame in needing a helping hand as you make the transition from career life to retirement life. A retirement planner might help map out your finances, find places where you can cut costs, and identify additional sources of income.
A professional can also support you long before you actually retire, aiding in planning, investing, and building up your savings. Remember: the earlier you get started, the more you’re likely to have, and the more time you’ll have to adjust when you need to. With the right planning and foresight, a comfortable retirement is possible.