No matter what your age, it’s important to start saving as much money as possible for retirement.
It’s not easy to come up with a lot of extra cash when you’re struggling to pay your bills, but if you want to be financially secure in the future, retirement savings are crucial.
There are several different ways you can save for retirement, and here are some of the best methods for getting started.
1 Live below your means
One of the best ways to start saving is to live below your means.
This means spending less than you earn and putting some money aside in savings.
If you can’t afford something, wait until you can. You’ll be surprised how quickly this simple practice will add up over time.
It’s also an excellent way to teach children about the value of a dollar.
✓ Give yourself a raise:
The simplest way to increase your income is by getting a raise at work.
Once you have that, try negotiating for a higher starting salary if you’re just beginning your career or going back to school to get additional training.
✓ Create multiple streams of income:
Having more than one source of income is another great way to boost your savings account balance.
For example, if you are self-employed as well as employed full-time, then earning two salaries rather than one means you can put away 50% of your earnings each month instead of 25%.
2) Invest in yourself
It’s important to have an emergency fund and savings account, but if you want to retire comfortably, you need a plan. The best way to start saving is by investing in yourself.
You can do this by paying off any debt you have, living below your means, and trying not to touch that paycheck until it hits the bank.
It might be tempting when you get paid on Friday night and there are some good deals at the grocery store or convenience store, but don’t do it!
Save those dollars to put into your 401(k) where they will grow over time.
They’ll make a huge difference in what you’re able to afford when you finally decide to call it quits from work (and we all will someday!).
The key to successful retirement planning is figuring out how much money you need to save so that your investments continue working for you after you stop working.
If you’re not sure how much money this is, ask your financial advisor about something called a Monte Carlo Analysis which helps figure out how long your money would last based on certain assumptions about investment returns and inflation rates.
Once again, talk to an expert because it’s never too late to start thinking about retirement!
3) Invest in a 401k or IRA
401k and IRA accounts are an excellent way to start building your nest egg. Simply put, these accounts allow you to set aside a portion of your paycheck before taxes and invest it in a company or fund that offers the potential for growth.
There is a drawback, however: you’re not allowed to withdraw funds from these accounts until you reach 59-1/2 years old.
This means you’ll need to be diligent about saving and resisting temptation to spend the money you’ve already earned on things like clothes, cars, vacations and home remodels.
If this sounds like something you can do, then either a traditional 401k or Roth IRA may work for you.
The big difference between these two accounts lies in whether or not taxes will be withheld at withdrawal time (traditional).
no tax deductions if you qualify for one of the exemptions (Roth).
For example, a person making $75,000 per year with a 25% marginal tax rate would pay approximately $7,500 in taxes if they withdrew $5,000 from their 401k account each year.
That leaves only $4,500 to use as they please.
4) Cut back on unnecessary expenses
Saving for retirement is one of the most important things you can do. It’s never too early or too late to start saving and with a little bit of discipline and determination, you can be well on your way to a financially secure future.
The best thing you can do to make sure that your savings account stays healthy and will have a lot of money in it when it comes time for retirement is to get into the habit of spending less than what you earn.
You don’t have to deprive yourself completely, but cutting back on unnecessary expenses like eating out every day, buying new clothes when something already works just fine, going out every weekend etc.
will make sure that there are funds available at all times in your account.
Also, if you’re not able to cut back on anything else, pay off credit card debt instead of using it as an excuse not to save.
Plus, use tax-advantaged accounts:
If your employer offers 401(k)s or other types of retirement accounts then take advantage of them!
A good rule is to put at least 10% of your paycheck into these accounts so that they grow faster over time. And if you’re self-employed?
5) Have a side hustle
A side hustle can be an excellent way to supplement your income and help you prepare for a comfortable retirement.
The best type of side hustle is one that compliments the skills you already have or are working on building, and is something you enjoy doing.
If this sounds like a lot of work, don’t worry! You’ll be able to use what you’ve learned about yourself during this process in other areas of your life too.
It’s important to find out what works for you and stick with it as much as possible.
And remember, even if your side hustle doesn’t become a full-time job, it will still make you happier than not having any kind of plan at all.
Having a goal to work towards will give you purpose and motivation to live more productively.
So go ahead and start looking for a side gig that suits you today – there’s no better time than now! What would you like to do? Write? Take pictures?
Sell furniture? Dog walker? Making candles? Starting your own bakery?
Painting murals on walls in peoples’ homes and businesses? Teaching classes online (or offline)?
Working as a tour guide or giving walking tours around town,
offering information about history and landmarks from years past when people were unfamiliar with their own surroundings.
Every city has different needs and every need needs someone who can fulfill it.