When you envision retirement, where and what do you see yourself doing? If you’re like most workers, you dream of retiring rich. Are you thinking of indulging in hobbies you missed out while working? Globetrotting? Or pinching pennies to survive and pay bills?
The latter probably is not anyone’s ideal retirement but might be a reality for most people. According to a survey by Fidelity Investments, more than half of Americans are at risk of being unable to cater for their living expenses in retirement.
Even if you have all your savings on track, the last thing you want is to live a life of poverty after retirement. Pay attention to this article, as these tricks will guide you on how to have a comfortable lifestyle after retirement. Let us delve deeper and find out what they are.
Eliminate Unnecessary Spending
If you eliminate certain expenses, you will have more room to save for retirement than you might think. Take a look at your credit card statement and your bank statement; you will uncover some expenses for things that you rarely use, like subscriptions, club memberships, and other automatic charges for services you never use.
Also, periodically shop around for cable TV, Wireless services, Internet, and other services to see if you can land better deals. From there, you can boost your retirement savings from the amount you save from cutting unnecessary expenses and getting better rates.
Start Saving Early
Ensure you start saving as soon as you start earning. With a compound interest in place, even small monthly contributions towards your retirement can grow over time to a sizable nest egg. The more time you have to save, the more your money will grow.
For instance, if you start saving $350 per month at 25 years, increase the amount by 2.5% every year and earn 7% annually. You will have about $1.4 million by the age of 67. But if you wait to save until you are 35 years old, you would have only $654,000 by 67 years.
Saving Should Never Be a Choice
Ensure your retirement savings are automatically taking place every week or month. Open up a savings account and make sure a specific portion such as a 401k is withdrawn from your paycheck.
You can also set up automatic paychecks such as those from a brokerage or IRA accounts from your checking account. This will help your dollar cost average on your investments over time and put you one step closer to retiring rich.
Save at Least 10 Percent
Most Americans who are saving towards retirement set aside an average of 8.5 percent of their income annually. However, experts usually recommend saving between 10 to 15 percent to have a comfortable retirement.
If you start with 10 percent, ensure you gradually increase the amount as your pay also rises and hit the 15 percent savings per month.
Look Into the Employer Match
If your employer matches the contributions, you make to your workplace retirement plan, ensure you contribute enough to qualify for a full match. Otherwise, you will lose free money. The typical match type is 50 cents for every $1 you commit to a certain percentage of pay – usually 6 percent.
To be responsible for your financial future and fulfill your dream of retiring rich, there is no better time to start planning than now. Without setting standards and following them through, you will find yourself working for the rest of your life.