Whether you’re just getting started in your career or nearing the end of it, you should be thinking about and preparing for retirement. Knowing how much to save, the best ways to save and how to know when you’re ready to retire are all complex questions. Fortunately, there are some trusted financial experts who have shared their insights about these very topics — including Tiffany “The Budgetnista” Aliche, Robert T. Kiyosaki and Suze Orman.
Don’t Put Off Saving For Retirement — Even If You’re in Your 20s
“The earlier you start, the sooner you can get your money working for you,” Tiffany “The Budgetnista” Aliche, co-host of the “Brown Ambition” podcast, wrote in a blog post. “Your 20s is a great time to start because this is the time in your life when you can afford to put away a large chunk of your income. (…) The earlier you begin, the better the chances that you’re going to be taken care of when you’re older. Retirement may seem far off, but it will be here sooner than you think.”
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Start by Asking Yourself These 5 Questions
When you are figuring out your retirement savings goals, ask yourself these five questions, as outlined by Danetha Doe, founder of Money & Mimosas:
- When would you like to retire?
- How much does it cost you to live on a monthly basis? Use your weekly money date calculations to total this number.
- What do you have saved so far?
- What other sources of income will you have in retirement?
- What would you like to do in retirement? Travel, go on solo yoga retreats, volunteer? All of this will determine how much extra money you may need in retirement.
Rethink Your Retirement Age
Once you’ve taken the time to figure out how much money you will need to live in retirement and compare that to how much you have saved, you may find that you’re not on track to retire when you want to.
“There’s another way to brighten your retirement picture besides saving more, and that’s working longer,” Jill on Money founder Jill Schlesinger wrote in her book, “The Dumb Things Smart People Do With Their Money.” “Some people might not be in a position to work longer, while others might get nauseous at the thought of clocking in a minute longer than necessary. For the rest of us, working longer is something we should consider, because it a) provides more time to contribute to your retirement plan; b) prevents us from dipping into our nest eggs and c) can increase our Social Security monthly retirement benefit.”
Pay Yourself First
In his book “The Automatic Millionaire,” David Bach writes that the way to retire rich is to pay yourself first — automatically put a portion of every paycheck toward your retirement.
“Save 15 to 20% of your pretax income in a tax-advantaged retirement account,” such as a 401(k), 403(b) or IRA, he wrote.
If You Can’t Contribute 15% Now, Automate Scaling Up To Reach That Amount
Not everyone can save 15% of their paycheck right now, but that should be the ultimate goal, said Jason Zweig, author of The Wall Street Journal column The Intelligent Investor.
“If you feel you can’t save the maximum right away, sign up for an ‘automatic escalation plan’ to raise your contributions down the road,” he told Frontline.
Keep Reading: The Complete Guide to Your Best Retirement Age
Keep Contributing To Retirement Accounts, Even During Down Markets
“One of the biggest mistakes investors make is panicking during a bear market and pressing pause on investments,” Erin Lowry, author of “Broke Millennial,” wrote in a column for NextAdvisor. “Don’t. Keep steady with your contributions (assuming you can meet your basic needs). This will enable you to buy in during a dip and ensure you won’t miss out on the market’s rebound. It’s incredibly difficult (read: impossible) to time the market, so it’s a better bet to just stay consistent with regular contributions to your retirement account — a method better known as ‘dollar cost averaging.'”
Automate Retirement Savings With Lifecycle Funds
“Target-date funds (or lifecycle funds) are great funds for people who don’t want to worry about rebalancing their portfolio every year,” “I Will Teach You To Be Rich” author Ramit Sethi wrote on his blog. “They work by diversifying your investments for you based on your age. And as you get older, target-date funds automatically adjust your asset allocation for you.”
However, there is risk involved with these funds, so they are not for everyone, he said.
“For you, the ease of use that comes with lifecycle funds might outweigh the loss of returns,” Sethi wrote.
Invest In Assets That Will Provide You With Income in Retirement
“Rich Dad Poor Dad” author Robert T. Kiyosaki outlines the “Rich Dad” way to prepare for retirement in one of his blog posts:
“The more cash flow you could get out of your assets, the higher your wealth would be. It was the way to win the game and to win at life.
“Today, (my wife) Kim and I invest in assets that cash flow like real estate, oil wells, business and more. Each month, cash pours into our accounts from these investments, covering our expenses. (…) Once you understand the words ‘infinite returns,’ you will never have to work for money again.”
401(k) vs. Roth 401(k): Which Is Better for You?
Delay Collecting Social Security
Even in tough financial times, Suze Orman recommends delaying collecting your Social Security benefits for as long as possible.
“The benefit you can receive if you wait until you are 70 to start collecting will be 76% higher than the benefit that you get if you claim at age 62. That is a tremendous return,” the “Women & Money” author wrote on her blog.
Get Help From a Financial Advisor
Retirement planning is a complex undertaking, so seeking a professional to help can be a worthwhile investment.
“Working with a financial planner can be a smart way to stay informed along the way and tap the expertise of a professional to ensure you are saving enough and are on track to achieve your goals today and in the future,” Farnoosh Torabi, host of the “So Money” podcast, wrote on her blog. “To begin your search, ask friends, family and colleagues for their recommendations. Initial consultations with planners are generally free and that’s an opportunity to see if working with this person would be a right fit. Look for planners with the CFP or certified financial planner designation.”
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