Research has proven that the prime of someone’s life is actually during retirement despite common thought that it is during a person’s youth. When it’s time to retire, people have complete freedom. They have already raised their children, paid of their debt, and can now enjoy life without any responsibilities whereas people in their 20s and 30s are usually full of debt, unsure of the future, and are insecure in their jobs.
However, to fully enjoy retirement, it is important to have saved up a sizeable nest egg. Though many decide to put off a retirement savings plan until later, it is far wiser to set one up as soon as possible. With these 4 simple steps, saving will be easier and retirement will come sooner:
- Retirement Plan
Although social security benefits used to be enough to offset the cost of living, this no longer holds true. To be assured of retirement money, a person should focus on saving money for him or herself.
A retirement plan begins with a schedule in order to keep savings on track. Many businesses provide their employees with a 401(k), but if you are self-employed or a contractor, you need to set up a retirement savings of your own.
Men and women need to determine their net worth (total value of assets minus value of debts) to understand how much they need to save. The number should be positive. If it is not, then getting to a positive number is the first goal. A secure nest egg needs to deliver annually 70 to 90 percent of pre-retirement salary. It is important to budget recurring expenses, pay off debts, and begin saving the extra. Speak with a certified financial planner in order to create a feasible plan.
- Get Out of Debt
If in debt, the most important thing a person can do is to get out of debt as soon as possible.
With debt comes interest, and with interest comes more money. Paying off debt payments alongside savings will actually leave a person with less money. If debt is paid off as soon as possible, people will pay less interest, which puts more money back into their account and future retirement fund.
For large impending debt payments, sometimes using a car title loan from a company such as TitleMax.com can be a viable option.
- Manage Mortgage
While home mortgages are expensive, homes are a valuable asset. If interest rates begin to fall, look into refinancing the home’s mortgage to a lower rate. Any extra saved money can be used toward the retirement fund. Ultimately, the best option is to have the mortgage paid off by the time retirement rolls around. Not having to pay a monthly mortgage payment will keep the retirement fund in tact.
- Budget on the Back End
Before retiring, create a retirement budget to determine whether you have saved enough in your nest egg. Running out of many after retirement is a much harder fix than working a couple extra years to reach a sufficient, comfortable amount.