Majority put off retirement planning because they think it is light years away. Most people, especially the young ones, use this mindset of enjoying their money while saving very little for retirement or a rainy day. However, time is a thief that waits for no one. If you put off retirement planning at the very last minute, you are setting yourself up to fail.
The best time to start retirement planning is when you’re young. However, if you have put it off, don’t fret because you can still work with the time left to make the necessary strategies to maximize your savings and investments. You must plan, so you can take concrete steps to reach your retirement goals.
Here’s what you can do to ensure that you have money to sustain your lifestyle when you no longer have employment:
1. Maximize Your IRA
Most of you have or are familiar with a Roth and a 401(k) plan. They offer these IRA or investment retirement plans when you are employed in a company. These uses your wages to invest in paper assets through a financial institution, which allows you to grow your money for your retirement.
There are seven types of IRA plans, so you can choose the best one that fits your needs and lifestyle. Read a brief explanation of each:
l Traditional IRA: The oldest and most well-known plan which you can avail with pre-tax dollars. This is the standard 401(k) plan, where investment earnings are not taxed as long as the money is in the account. Withdrawals in retirement are taxed.
l Roth IRA: In contrast, after-tax dollars are used to fun this plan. Withdrawals in retirement remain tax-free.
l SEP IRA: This is an acronym which means Simplified Employee Pension which lets you grow your income free of tax, but distributions in retirement are all taxed.
l Nondeductible IRA: Contributions to this fun are after-tax and these are not deductible. The principal in retirement can no longer be taxed, but growth in earnings are subject to tax.
l Spousal IRA: Spouses that file a joint return can avail of this if one spouse is not working, or the other has a very low wage.
l SIMPLE IRA: Another acronym which stands for Savings Incentive Match Plan for Employees. As the name says, it is meant for small start-ups and self-employed individuals. Contributions can be made by salary deferral.
l Self-directed IRA: This is a unique IRA that lets you invest in real assets such as real estate, privately held companies, and precious metals. Gold IRA investing falls into this category.
2. Tweak Your Lifestyle
If you’re intent on saving a nest egg for your enjoyment when you’re old and gray, then you should make adjustments to your current lifestyle. You need to save as much as you can from your current income, and that means tweaking your expenses.
Inspect your budget to check if there are money drains. Sometimes, people aren’t aware that they are spending so much on things they don’t really need. By letting go of the gym membership you don’t use, by giving up your cable that functions the same as your Netflix, or by foregoing expensive designer coffee, you can save a lot more money.
3. Consider Investing Your Money in Gold
People in the olden days were on to something when they invested their money on gold jewelry. These are very easy to pawn during times of financial crisis. In the same token, you may want to consider gold IRA investing because this is the only IRA plan that protects you from recession.
Another name for gold IRA is precious metals IRA because they tie your money up with gold bars, coins, and bullion cubes. You are not at the prey of a volatile market with this kind of retirement account. It is prudent to speak with a qualified representative to help you maximize your gold IRA investing.
4. Take on an Extra Job
Apart from your 9 to 5 job, you can do a side gig that you really enjoy. You can bake, edit videos, write content, babysit, tutor, etc to help add to your income. The more money you earn, the more money you can save for your retirement.
5. Minimize Your Debt
The last thing you want to face when you are retired is debt. The best way to nip this in the bud is to never borrow more than what you can pay. Some debt is good, as it benefits your credit history. However, finding yourself in credit card debt with a high interest rate is a huge money drain that can lead you to financial ruin. From the get go, live within your means and make responsible debts that you can pay off.
6. Diversify Your Investments
It makes sense to never put your eggs in one basket, so should one scheme suffer a setback, you do not jeopardize your future. For super safe investment, a long-term cash deposit with a higher interest rate is good, along with treasury bonds. If your risk appetite is higher, then you can invest in UITFs, stocks, and mutual funds.
Real estate is another good solid investment for your retirement. Apart from buying property that increases in property value over time, you can get into rentals or REITS.
As you can see, there are many ways for you to achieve your retirement goals. The key is planning your income and controlling your expenses. Make reasonable purchases to live your best life but never at the expense of your future.