In 2019, CNBC reported that close to 25 % of Americans start saving in their 30s, 15 % in their 40s, and 6 % in their 50s. But when do you have to start saving for retirement? The answer is simple: as soon as possible. Ideally, start saving in your 20s.
Financial stability in retirement does not happen suddenly. It’s the result of good planning, determination, and commitment. And while it’s ideal to start early, it’s never too late to start.
Do you have the tools to get started?
The key to enjoying your retirement to the fullest is planned savings. But how do you achieve it?
Tools for a planned retirement
Here are several tools to achieve a planned retirement.
1. Save regularly
You should set aside a portion of your income for your retirement savings. Start by identifying a specific percentage entirely earmarked for retirement savings. You can consider 10 %. 15 %, or 20 % of your monthly income. Also, you can start with a small amount and then increase it according to your circumstances. The important thing is to automate saving for your retirement.
2. Identify needs and budgets
To properly calculate how much you should save for retirement, start by visualizing your retired life: what activities you would like to practice and what you would like to learn. Also, identify expenses such as: treatments, follow-up medications, visits to specialist doctors, etc. Think about how you would like to live during those 20 or 30 years.
Some questions that can help you visualize your future objectively are:
· At what age do you plan to retire?
· Will your spouse retire at the same time?
· Do you plan to move out of the country or of your current home when you are retired? Will it be a cheaper place or a more expensive one?
· Do you want to travel or practice a potentially expensive hobby?
· Will you have extensive health insurance coverage?
· Will you have any additional income, such as a rental home or an established business?
Ideally, you should have up to 80 % of your annual income when you retire.
3. Consider a 401(k) plan with your employer
A 401(k) savings plan gives you the opportunity to prepare for your retirement. Some companies offer this opportunity to their employees. It consists of automatically designating a specific percentage of the employee’s salary to a 401(k) account, while the company makes an additional contribution in proportion to the determined amount.
For example, if you as an employee decide to contribute 5 % of your monthly salary to the retirement plan, your employer could contribute an equivalent of 2 % or 3 %. The percentage varies by company and other characteristics, but the purpose remains: saving for your retirement.
4. Benefit from an IRA
An individual retirement account (IRA) is a savings and investment tool, with great advantages. It’s easily obtained, helps you save on taxes and automates contributions for your future. Set up a retirement savings fund. Contributions are deducted from your income. In addition, your profits in the IRA do not pay taxes until the money is withdrawn.
5. Save your retirement savings for your retirement
Sometimes, unforeseen situations arise that bind us financially, but the money saved for your retirement should remain intact. It’s important to set your goals and limits, and commit to your future.
6. TOLIC gives you more for your IRA
· Fixed IRA: Your investment grows with a guaranteed interest.
· Indexed IRA: Potential to increase your profit based on index growth and with market downturn protection.
· Fixed Annuity: For more return on your money.
· Indexed Annuity: For further growth of your retirement savings.