The average American has not calculated how much they would need to live their current lifestyle after they retire. Less than 50 percent of the population has even attempted to figure out how much they will need in retirement. So, where should you begin?
- Figure out how much you need to retire. Living in retirement is expensive. If you expect to continue living your current lifestyle, you will need approximately 70 percent of your preretirement income to keep that standard of living. Depending on how much you earn, you may need a little more or a little less. The bottom line is that you need to know how much you will need first.
- Start saving and stick to it. You are never too old to start saving for retirement. Start small if you have to, but devise a saving plan and stick to it. Once it is a habit and you begin to see your money grow, you will be even more motivated to build your nest egg.
- Pay yourself first. If your employer has a retirement savings plan, contribute as much as you can each and every month. Your employer will kick in some – most companies match employee contributions – and your balance will increase over time. Sign up for an automatic deduction out of your paycheck. Make sure you understand all of the ins and outs of your plan including your employer’s contribution and how long you need to be in the plan to receive the full balance.
- Understand how basic investments work. You should study different types of investments and understand how your employer’s retirement savings plan works. Put your savings in a variety of investments. This helps you to reduce your risk and improve your rate of return.
- Do not withdraw from your retirement savings plan. There are a number of reasons why you should not pull money out of your retirement savings plan. Sure, a vacation to the Bahamas sounds great, but so does 20-plus years of doing whatever you want day in and day out while you’re retired.
- Set up your own IRA. You can invest up to $5,500 per year into an Individual Retirement Account. You can start with much less. There are different types of IRAs as well, including the Roth IRA and the traditional IRA. Both are easy to set up and provide large tax breaks.
It would be ideal if you entered retirement debt-free. If you have excessive debt, consider consolidating with a car title loan from Embassy Loans. An auto title loan can help someone reduce their debt quickly. Be sure to have a plan to pay off the car title loan quickly too, so that you can enjoy retirement debt-free.