Retirement is a stage where you want everything to fall into place; to finally have some peace; to finally getting to enjoy your days; to finally do the things that you had no time to before; to finally ‘settle down’ in happiness, knowing that you have finished with the ‘mule like’ working days of your life. But, what the retirees normally find, due to the incessant growth of inflation, is that the money they have saved barely meets both ends and is just sufficient to live by. Not the ideal situation that anyone one wants to find themselves in; more often than not, they are forced to shelve their after retirement plans and stay cooped up in their own homes, not able to enjoy their hard earned freedom to its fullest.
But then again, if you plan, save and invest your money wisely while you are young, robust and working, you will find that retirement is not as bad as one initially thought. The key word here is plan; planning how to go about accumulating money so that when retirement finally comes calling, you are left with a sum that is not just more than sufficient but also extremely comfortable. There are many ways to go about this. Here are some ideas.
1. Debt Clearance
This is one of the first steps that have to be implemented. Pay off your credit card bills as soon as possible; any savings you actually make is thrown out of the window when you pay the interests for these bills. If you have any debts, then pay them off as soon as possible. It is better to be debt-free.
One of clearing your debts is through debt negotiating and settlements. If you have any outstanding loans or debts emptying your pockets, then you might want to try this. When you actually admit to the lender that your resources are too small and that you are unable to meet their demands, most lenders agree to a negotiation amount that will, in all probability, be affordable for you to pay off. Remember that if you pay off your debts as early as possible, it is your savings that actually gains.
2. 401(k) and IRA
Make effective use of these two. Contribute as much as possible to your 401(k) account. Check on its annual contribution limit and earmark at least 10% of your annual income towards it; not just earmark it, follow through. To avoid any change of heart or temptation, arrange for the money to be directly deducted from you pay account.
The IRA also has many tax advantages for retirement savings. There are many types of IRA- Traditional, Roth, SEP, SIMPLE, Self-Directed. Go through each and choose a scheme that would help you the most. Make the most out of these benefits; many do not use it to its full potential, thereby squandering a golden opportunity to save your own hard earned money.
3. Actual Saving
There is no other way to ensure that you have money left for your retirement- save your money. Save whatever you think you can afford to. If you do not have the habit of saving or haven’t started from an early age itself, then start NOW. Every penny counts, so start saving as much as you can. Saving is the back bone of your retirement fund and as such it is important to make sure that it is in a healthy state.
Investing is also a key part of having a retirement that will cater to your whims and fancies- or at least to the little extras that you might need in retirement. Investing definitely has vices that one must be cautious about and hence, it is important to get a sound professional help. Choose a financial advisor who works on fees and not on commissions; it will be hard but worthwhile. Make sure that you are investing in things you understand; do not go for the high risk gambles as it does not guarantee high returns; ensure that you properly understand all the risks involved before you take the plunge; diversify your investments, never put all your eggs in one basket; and most importantly do not just blindly trust your advisor, do some research of your own. If done carefully, investment could yield good dividends, helping you beat inflation.
5. Spend Judiciously
Although this might seem a pretty straightforward suggestion, it does entail some things that we normally ignore or forget. If you are in the final stages of your ‘working life’, this becomes even more important. Start allotting priorities to your bills, finish off those that are urgent and have the largest interests first. If your lifestyle is not conducive enough to help you save, then it is high time that you got one. Restrict yourself and your family from spending on services, goods and other items that are really a luxury. It might seem harsh, but it all adds up and will help you in the long haul- when you really need it; it is the little drops of water that make the mighty ocean.
6. Review Your Goals and Your Plans
Setting your goals and devising plans to achieve those goals are difficult enough; but strictly adhering to those plans is going to be a daunting task, that must still be completed. Hence, review your plans and goals constantly and gauge how closely you are sticking to it and how far you have come along. A process of constant review is required if you are to succeed in nurturing a health nest egg. Include your family or at least your partner in your plans; this way they will also be able to help you stick to the plan and achieve your targets. If you find yourself falling behind, tighten your resolve and keep on striving hard; just remember that your work now will be one day rewarded appropriately.
Follow the above suggestions and you will find yourself staring at a retirement that meets all your expectations.