Hidden Secrets to Saving for Retirement

Gone are the days where you worked for a certain number of years and had nothing to worry about when it was time for you to retire. Now, in order for you to have a nice-size nest egg, you need to start saving for your retirement as soon as you start working your first job. The average person doesn’t give much thought to their retirement when they are just starting out. However, that doesn’t mean that it is too late for them to start today. Here are some tips and tricks that can help anyone save for their retirement so they can live a comfortable life, not an impoverished one.

Calculate Your Needs

You need to have a realistic picture of how much it is going to cost for you to support yourself once you retire. Don’t assume that if you stick with your employer long enough that you are automatically covered. Take a look at your retirement savings and do the math. Don’t forget to account for the cost of living and inflation. Ideally, you should expect to save up enough money to replace up 60 to 80 percent of your pre-retirement earnings.Brush up on your financial knowledge by readingbooks and surfing the internet on how to start planning for retirement.Fisher Investments Plan Your Prosperity by Ken Fisher lays out what to consider you should consider when planning for retirement. On the internet, Business Insider has a list of the best online financial websites. You can’t do too much research!Don’t forget to check out other sources of information as well.retirement

Check Out What Your Employer Offers

Many employers offer their workers a 401(k). This type of account can be a significant source of your retirement savings if you utilize it properly. Since most employers match a percentage of their employees’ contributions, increasing your own contributions can really pay off. You are essentially getting free money to improve your quality of living in the future.

Many entrepreneurs, independent contractors, and self-employed professionals do not have a 401(k). However, there is an alternative that they can still take advantage of: IRAs. There are two types of IRAs:traditional and Roth. Just like 401(k)s, you can contribute money to IRAs and watch the money grow without being offset by taxes. Just stay mindful of the limits and rules that govern IRAs. For example, the maximum contribution anyone can make to their IRA for 2016 is $5,500. Anyone who is 50 or older can contribute up to $6,500 a year.

It is also possible for you to have a 401(k) and an IRA. If you do, plan your contributions so you can enjoy all of the advantages and increase your retirement savings significantly.

Mutual Funds

Learn what you can about mutual funds, especially target-date ones. Target-date mutual funds can be great investment tools if you utilize them correctly. For example, the “target date” mutual fund uses the date you plan to retire and adjust risk. Once invested, the mutual funds regularly invest into products with consideration to your situation in life.

Social Security Is Extra

Think of social security as dessert. Since you don’t know how much of it will contribute to your monthly income, it is best to leave it as a possibility, not a complete certainty.

Investment Options

There are other sources of retirement income available; however, most require you to make an initial investment. Many of these options do not pay right away. In fact, many of them offer a bigger return on your investment if you are willing to invest for longer   periods of time. Talk with a financial adviser to learn more about your options. Investing for retirement is not as hard as it sounds. With the right amount of knowledge, guidance, and options, you can grow your retirement savings while you sleep. p>

Don’t Touch Your 401(k) and IRAs

If you switch jobs, you may be tempted to cash out your 401(k) or IRA. Not only is this a bad practice, it is one that can hurt your retirement savings efforts tremendously. Instead, a much better option is for you to roll your 401(k) over to your new employer so you can continue what you’ve started to avoid having your hard-earned money taxed at 10 percent and penalized by the IRS at 7.5 percent. IRAs also have age restriction rules that you need to be aware of.

Save Your Windfalls

Every now and then you may receive a bonus from work, a raise, or even win the lottery. While that extra money can help to increase your comfort and financial situation now, they can be more beneficial if you add them to your retirement savings.

Once your retirement savings reach $75,000, you’ll find that increasing it is much easier. Plan your savings decisions wisely and you’ll be able to reap the benefits when you retire.