It is a fact that people are living longer. Thirty years ago, retirement may have lasted around ten or fifteen years for the average person. However, these days retirement can last for twenty to forty years depending on when you are able to hang up your work boots. To prepare for that eventuality, here are six tips to make sure that your savings are enough to go the distance.
Saving money doesn’t have to be hard. In fact, the hardest part is letting go of the money in the first place. We all want to save but we are torn between going to that sale now and planning for a future that is many years away. Okay, let’s see if we can make it easy enough for anyone to save the money that they need.
1. Think about your retirement goals. What do you want to do after you retire? If you want to travel, chances are that travel costs will rise significantly by the time you retire. If you want to own a beach house or spend half the year in a warmer climate, you will have to free that money up to do just that. Setting a goal gives your financial expert a place to start.
Create a retirement plan, figure out how to accomplish it, and stay with it. When you plan to retire, save some money ahead of time. Set aside those savings for just your goals. Try starting small and increasing your savings as much as you can per month to reach those goals.
2. Contribute all that you can to your employer’s retirement plan. If you are closer to retirement age than others, you will likely want to contribute more of your income to the plan. At least contribute up to the maximum percentage that the company is willing to match. A good way to save more is to increase your plan contribution when you get a raise. Instead of using the raise for other things, add one or two more percentage points to the amount deducted from your paycheck for retirement.
3. Consider your spouse’s retirement plan. As partners, both of your retirement plans will feed into the amount of money you will have to live on after you quit working. Be sure that your spouse is following the same guidelines to get the most out of his or her plan.
4. Cut back on your expenditures each week, particularly with respect to little things like fast food or coffee. Keep a list of the things that you must live with. Expenses such as these can accumulate over a period of years, and if you eliminate them, it provides you with a big chunk of extra money.
5. Look at your investment options. While a savings type account for your 401(k) is safe, a more diversified picture with a mix of high risk and low risk stocks and mutual funds makes the most of your money. You know what they say about putting all your eggs in one basket or playing it too safe.
6. Review your Social Security statement. You get one every year from the Social Security Administration. It tells you what your benefits could be based on your earnings-to-date and the amount of Social Security taxes you have paid.
There are ways to save for retirement without it being such a struggle, especially if you start early enough to do it.
You also need to prepare yourself mentally for retirement, because the change can hit you really hard. While you might be looking forward to all that rest and relaxation, many people become depressed when they stop working. Schedule yourself some useful activities, and do things that keep you feeling like you’ve got a concrete purpose in life.
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