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Imagine a perfect and comfortable retirement. You sunbathe on the beach and drink cocktails. Or maybe you’re at home indulging in hobbies, taking long morning walks, or spending time with friends. It’s easy to daydream about retirement, but saving for it takes time and effort that many Americans struggle with.
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Bills and other priorities eat into your income Saving for retirement might seem daunting, but there are strategies that can help make the process easier. Find a way to catch up on your 401(k), grow your savings, and retire wealthy and secure.
Cut unnecessary expenses
Your budget may have more room to save for retirement than you think. Tom Corley, CFP and author of Rich Habits: The Daily Success Habits of Wealthy Individuals, recommends checking your bank statements for unnecessary expenses.
“It reveals certain costs for things you don’t use, such as club memberships, subscriptions, and automatic billing for services you’ve never used,” he said.
Remember to check competitors’ prices for cable, internet, and other services to see if you can get better rates. increase.
Take our survey: What are your financial priorities for 2023?
Start saving early
One of the best ways to retire rich is to start saving as soon as you make money. Thanks to the power of compound interest, even a modest monthly contribution to a retirement account or other high-interest account can grow into a large nest egg over time. More time means more money.
With 12 month CDs and more, you can take advantage of that high interest rate. A fixed interest rate ensures that your savings grow whether you’re depositing money for short-term or long-term goals.
Don’t make savings an option
Ocean Wealth Group President Michael Hardy said:
Automatically deduct contributions to your 401(k) or other retirement account from your paycheck each month or every paycheck. “This eliminates the possibility of putting money away from your retirement account,” Hardy said.
Save at least 10% annually
Many retirement experts recommend setting aside at least 10% (ideally 15%) each year to ensure a comfortable retirement.
If you can’t save much when you’re starting out, start small and increase your savings rate by 1% each year. You can put those funds into your account and get rewarded as a saver.
Use Employer Match
If your employer matches your contribution to your workplace retirement plan, make sure you contribute enough to fully match. Otherwise you will lose your free money.
The most common type of match is 50 cents for every dollar an employee contributes up to a certain percentage (usually 6%).
Save on Raises — Don’t Overspend
A raise will give you more room in your budget. However, if you’re already making ends meet on your current salary, deposit the extra money from your pay raise into your retirement account instead of your bank account.
John Sweeney, Founder and Managing Partner of Momentum Capital Partners, said: “Instead of deciding to buy a better car or a ()bigger house, put them all away.” That way, you won’t have to sacrifice your standard of living in retirement.
make a catch-up contribution
If retirement isn’t too far away, use the catch-up contribution to catch up on your retirement savings. can be added. You can also increase your IRA contribution by $1,000.
don’t be afraid to take risks
Ken Weber, president of Weber Asset Management and author of Dear Investor, What the Hell Are You Doing? However, you cannot store cash in a savings account. “You have to take some risks to get rewards later,” he said.
Weber said that at each stage of life, you should take as much risk as you can afford to invest. Ideally, most of her retirement savings should be invested in stock mutual funds in her 20s and her 30s.
As you approach retirement age, you can lower your risk by investing in fixed income assets such as bond funds in addition to stocks. Or consider a target date fund that automatically adjusts your stock and bond allocations as you approach retirement.
Diversify your investment
Don’t invest all your money in a single stock. If you do, you could lose your savings if that stock crashes. Mix stocks and bonds to diversify your portfolio, or even better, mutual funds.
And if you want to add a more secure option to the mix while increasing your savings, go with a high-interest savings account. You only need $100 to open an account and receive competitive interest rates with a balance of $10,000 or more. Increase your money while keeping it easily available in case you need it in an emergency.
Beware of high fees
When investing in mutual funds, be careful not to let high fees weigh on your returns. According to the U.S. Department of Labor, if the account fees and expenses are 1.5% of his, his retirement balance will be 28% lower than if the fees were 0.5%.
However, investments offered in a 401(k) are likely to come with varying fees, so consider switching to a lower-fee savings option.
stay on course
You might think that by withdrawing money from the stock market during a recession, you’re protecting your own nest egg. But what you’re really doing is selling when the stock price is down to lock in the loss and miss the opportunity for your investment to recover.
“A well-constructed financial plan takes into account market volatility,” says Weber. “If you have complete faith in your plan, it will be easier for you to survive market turmoil.”
Tip: Don’t let your emotions ruin your investment.
Invest in a Roth IRA for tax-exempt retirement income
Contributing to the Roth IRA is a great way to pool your tax-free access to your retirement funds. Other retirement vehicles, such as traditional IRAs and 401(k)s, cannot do the same.
invest in income-generating real estate
Another way to secure your retirement savings is to purchase income-generating real estate. Todd Tresidder, founder of Financial Mentor and his financial coach, says it’s important to buy and finance wisely.
One of the former casino card dealers, Tresidder, knew that he worked the cemetery shift to pay his bills. During the day he bought and renovated homes to increase his fortune. He retired in his early 50s, owned five rental homes, and had a passive income of over $5,000 a month.
get a side gig
Taking a side job, doing freelance work, or turning a hobby into a money-making venture can help you increase your income and put extra cash into retirement savings.
If your side hustle is considered self-employed, you may be able to contribute to a personal 401(k) or simplified employee pension plan. And these donations may be tax deductible. You can set up either type of account through a low-fee investment firm.
Downsizing before retirement
“A lot of people live with the myth that if you can afford it, you should buy as many homes as you can,” says Tresidder. However, large homes often come with large mortgage payments and high insurance, utility, and maintenance costs. “All of this robs you of your ability to save,” he added.
If you have a bigger house than you need, don’t wait until retirement to downsize. Cut your costs now and save the difference.
relocate to lower the cost of living
Living abroad or moving to a lower cost of living state is one way to control your retirement expenses. However, if you move while working, you can increase your savings and live a more prosperous retirement.
Tresidder said he has clients who have landed jobs with US companies who are relocating to other countries where the cost of living is lower. As a result, they can wear more socks for retirement.
Find an employer with a better retirement plan
Employers that offer 401(k) matches are good, but those that offer pensions that create a lifetime income stream after retirement are even better, Tresidder said.
While many employers have moved away from these so-called defined benefit plans, 16% of Fortune 500 companies still have confirmed new hires, according to a 2018 survey conducted by professional services firm Willis Towers Watson. We offer a benefit plan.
According to Tresidder, jobs with pension plans are actually better than jobs with slightly higher salaries.
keep up with jones
Your friends and neighbors may look rich with all they have. But the expense of keeping up with Mr. and Mrs. Jones could hurt your chances of being rich in retirement. there is.
“Establish a lifestyle that puts savings first,” Sweeney said. And find a group of friends who also value your savings so you don’t feel pressured to spend.
get professional help
Hiring a financial advisor won’t guarantee you’ll retire wealthy, but it can increase your chances.The right professional can help you develop a comprehensive financial plan and stick to it. .
Look for qualified professionals such as Certified Financial Planners, Certified Financial Analysts, and Certified Financial Consultants. These individuals must meet strict standards and adhere to a code of ethics in order to receive these designations.
don’t bet on your future
Buying lottery tickets is not a trick to get rich. Develop a strategy for saving for retirement instead of hoping that one day you will achieve great success. When your golden age comes, retirement savings will follow.
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This article originally appeared on GOBankingRates.com: 20 ways to save more and retire with peace of mind
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