Worried about your retirement savings? Here is our advice on how to start and how much you need to save in order to retire happily.
The sooner you begin, the more time your money has to grow. If possible, start saving when you have consistent paychecks. Typically the best time is around 25. Financial planners recommend that you save 10%-15% of your income starting in your 20’s. This money that you save will have time to compound more interest, making you money off of your money.
You don’t have to be rich.
David Bach, a financial planner, said, “You don’t need to have money to make money. You just need to make the right decisions- and act on them.” The trick is to save a little every day, every week, or each paycheck. Instead of buying something you don’t need, save those couple of dollars for your future retirement.
Where can you save your money?
There are two different places that you can keep your retirement safe. The first is an IRA account (Individual retirement account). It has tax-free growth but is not employer sponsored like 401(k)’s are. 401(k)’s are employer based and the payment is deducted from each paycheck. If you don’t want to worry about setting aside money each month, set up a 401(k) through your employer and have it automatically deducted. However, you can do both! For more information about 401(k) accounts see here. For more information on an IRA account, see here.
If the growth rate in these retirement accounts won’t be enough to last, you can also invest your money. Investing in stocks or bonds, with a high interest rate can be very beneficial when it comes to saving.
Are you too late?
If you haven’t been saving for retirement or feel like you are behind, the best option is still to start now. Try saving more than the 10%-15% until you have retired. While the money won’t have as much time to compound interest, it will still be beneficial.
So start saving today! Because before you know it, you will be ready to retire.