4 Helpful Tips For Thinking About Your Retirement Finances
Although many of us love to live in the here and now, at some point, it is important to think about your retirement. During retirement, many people take the opportunity to travel, spend more time with family and take up new hobbies. However, all these activities don’t come for free and you will need a financial plan to be able to enjoy it as much as possible. So how exactly do you prepare your finances for retirement and what options are available to you? Keep reading to find out 4 helpful tips for thinking about your retirement finances.
1. Open a savings account
When it comes to any sort of saving, whether for a house, a holiday or retirement, most of us choose to open specific savings funds for our goals. If you are thinking about creating a specific savings account for your retirement, the sooner you start saving the better. Even if it is just a small contribution each month this all adds up! A good way to do this is to set up automatic payments to the account each month, meaning you will never forget about it.
A certificate of deposit is a type of savings account that can offer you a higher interest rate than other savings accounts and is therefore perfect for preparing financially for retirement. Also known as a CD, a certificate of deposit requires you to keep money in the account for a certain length of time and of course the longer you leave it, the better your interest rate. Other popular savings accounts for retirement planning are Traditional Individual Retirement Accounts (Traditional IRA), which can reduce the tax payable on your savings and Simplified Employee Pension (SEP) Plans which are best for individuals who are self-employed.
2. Check up on your 401(k)
The second tip for thinking about your retirement finances is a 401(k). It is standard for most people to be offered a traditional 401(k) retirement plan by their employers. Be sure to take full advantage if this is available to you. The idea behind this sort of savings plan is that your employer will match the amount of money that you put into it. If you use this plan, a certain amount will be automatically deducted from your paycheck. Using a 401(k) scheme also can lower the overall tax that you are required to pay yearly. It is wise to keep an eye on your 401(k) and keep up to date with any changes. For example, if you change employers, you will probably want to combine all your investments into the one account to make things easier.
3. Think about investments
If you really want to give your retirement fund an extra boost, investing could be the way to go. Buying and selling stocks is a popular way to make a passive income. However, make sure to keep up to date with market trends as well as social and economic issues across the world as they can affect your stocks. The basic rule of buying low and selling high. So, this is what you should stick to in order to give your retirement plan a healthy boost.
4. Start to downsize
Something you can do closer to the time of your retirement is thinking about downsizing. This is a very popular option to put yourself in a better financial position. In fact, according to a survey in 2017, nearly two-thirds of older Americans moved or anticipated moving in retirement. So, what exactly are the financial advantages of downsizing? You can:
- Boost your savings with increased cash flow from the sale
- Secure a cheaper mortgage
- Lower your utility bills
- Pay less for maintenance, repairs and cleaning
All these points show that if possible, moving to a smaller home can make a dramatic difference to your retirement fund. Downsizing can put you in a better situation financially and can also improve your quality of life. You even may be able to move to a more desirable area.
I hope that these tips gave you some helpful information you can use when thinking about your retirement finances. Not everybody will be at the same place with planning, but it is never too late to start. Start today!
Additional articles you might be interested in:
- 4 Reasons Why You Should Outsource Your Finances
- How To Take Charge of Your Finances: Online Loans Explained
- 5 Strategies Used By Successful Women Entrepreneurs To Save For Retirement
- Top 10 Amazing Business Ideas To Make Passive Income
Katie Ault is a blogging intern at LadyBossBlogger. She has graduated from Bridgewater State University with a BFA in English Literature and a minor in Sociology.