Saving for retirement is essential. The concept of retiring on the checks you get from social security has vanished in the 21st century. You have to go out of your way to gather the funds necessary to sustain a long and enjoyable retirement.
Generation X is the most vulnerable group. In the financial crisis a study revealed that they lost nearly half of their total wealth. But it's never too early to save for a long and happy retirement, and it's certainly never too late.
This guide is going to show you the essentials you need to know about retirement saving.
1. Look Ahead
Don't be blind to your financial situation. Be proactive and take notice of what your various retirement funds are going to actually give you during your twilight years. Look into your employer-sponsored retirement program and see whether it's sufficient enough to cover your needs.
There are so many people that have yet to even think about retirement. The later you start saving for it the less you can expect to get. This can have the consequences of forcing you to continue working throughout your retirement simply to survive.
You can never save too much for retirement, so get started now.
2. Ignoring the Problem
It's never nice to think about your final years, and it's certainly never nice to think about your final years if you are unsure as to whether you can afford to survive. But this is a problem that will only become more urgent the older you get.
Don't enter a cycle of denial where you prioritize current financial issues over your retirement. Starting today is always better than starting tomorrow.
3. Make Sacrifices
If you are starting your retirement fund later in life, you may have to consider making sacrifices. In other words, you are going to have to sacrifice some of your current quality of life in order to get the income you need when you decide to leave work.
Make some conscious trade-offs to increase saving and reduce spending. One good move is to increase contributions to your work-based retirement fund. Each time you receive a raise, you should make it your priority to increase the amount of money you are saving.
A simple change in your state of mind can have a big impact going forward.
4. Face Financial Reality
If you have already reached middle age, you are about to enter your peak earning years. Many people are scared to face the financial realities of retirement. They are terrified of discovering they don't have enough to retire at the age they wanted. But it's vital that you know you are following a clear path.
You should have an intimate knowledge of interest rates and inflation, for a start. It may be worth contacting a financial advisor to find out about what other retirement options are open to you. You may discover that there are better choices available.
5. Don't Compromise Savings for College
It's become incredibly common for parents to set aside money to pay for their children's college education. Helping your children is a kind thing to do. It will only leave you in a difficult position, and it could come back to haunt your children later on.
You should be concentrating on YOUR future not someone else's. Furthermore, if you don't have enough money for retirement you may come to rely on your children helping you out. So you have only added further financial burdens.
There are loans for students and there are zero loans for retirement. You can't get financing to survive when you no longer have a working income. But your children still have these financing opportunities. Don't raid your retirement savings for college.
6. Consistency is the Key
Be consistent with your savings. Make sure that you are constantly contributing to your retirement fund. The key to building up a healthy amount of money is to be automatic. Make sure that you are constantly making payments and you will be amazed at how quickly it can all add up.
Setup a regular payment agreement with your bank so you don't even need to think about making contributions.
Saving for retirement is best done as early as absolutely possible. Failing to do this will leave you in the difficult position of not having enough money to meet your basic needs. Begin saving and commit to regular payments. Don't compromise on your retirement for anything or anyone.
How will you begin preparing for your retirement today?