You may be young, but it’s never too early to prepare for retirement. According to a study via the National Retirement Risk Index (NRRI) and the Retirement readiness Rating, 43% to 52% of Americans are not going to live their retirement years in the standard they’d hoped, according to their current living standards?
So what’s the best way to be prepared for the life you want to lead when you retire? Start planning now. Check out the following five tips to do so.
1. Contribute to an IRA or Your Employers 401(k)
So you’ve started working for an employer who has a 401(k). You may feel you don’t have the money to spare to contribute, but you’re losing out on more by not contributing. For one, it’s an excellent tax deduction, reducing your taxable income. Also, most employers offering this plan offer some matching contribution. Don’t leave behind that free money on the table. These savings plans handcuff you from quickly accessing this money, so saving it up is a breeze.
2. Save Up Automatically
Here is another way to start saving towards retirement. You can use this in combination with putting money into your IRA. Start saving money into a savings account by having it pulled automatically from your paycheck each pay period. Talk to your human resource or payroll department about taking a specific dollar amount or percentage, and deposit it into this designated account. This is a guaranteed way to get it in monthly.
3. Live Healthy to Save More
It’s said living healthy is costly, especially if you eat organic foods. However, organic products aren’t the only road to good health. There are other things you can do such as regular exercise, cut down on your fat intake, and stop smoking. The results: you reduce the chances of developing cardiovascular or lung diseases and live longer. This helps you save by eliminating excess doctors’ visits, hospital stays, prescriptions, and as a bonus you’ll also save on not purchasing excess, unhealthy items.
4. Start Eliminating Debt
Getting rid of debt now will help you prepare drastically when you retire. Not having to worry about a mortgage, car note, or credit card bills help you have money for future lifestyle and vacation plans. The sooner you pay these off, the faster you can start saving for an emergency fund to use instead of your retirement savings for emergencies.
5. Start a Side Business
In a study called Work in Retirement: Myths and Motivations, they studied 7,727 adults regarding their position on returning to work after retirement, 30% said they would go back to work. Instead of working for someone else, prepare now to work for yourself. This will help you enjoy your retirement years as you want, when you want.
Don’t feel it’s too late to prepare for retirement. Implement the above five tips now and keep on target for future goals.
Joe is a former financial advisor and media representative for American Express and Ameriprise. He was the “Money Man” at Detroit television WXYZ-TV, appearing twice weekly. He’s also appeared in Bride, Best Life, and Child magazines, the Los Angeles Times, Chicago Sun-Times, Detroit News and Baltimore Sun newspapers and numerous other media outlets. Joe holds B.A Degrees from The Citadel and Michigan State University.
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