Your nest egg needs to feed your lifestyle for years, potentially decades. That means you should take advantage of every strategy to plump up the fund. There’s no such thing as being too young to save for retirement.
Eventually, you’ll either decide to stop working or you’ll be pulled out of the workforce by illness.
It doesn’t matter if you’re hastening to catch up if you’re just adding extra padding to your retirement fund. The following tips should be useful.
- Start Right Now
Compound interest is your friend. The sooner you start saving money, the better off you’ll be when you finally retire. You’ll make money simply by keeping your account open. Set aside as much money as you can without impairing your quality of life.
- Think About Your Mortgage
A reverse mortgage is a reasonable option if you need extra money and you’re a homeowner. It’s a special loan available to people who are at least 62 years old. You’re given the money for your house upfront and you don’t have to move out or start making payments as long as you continue to live at the property.
When you pass away, the loan becomes due. Typically, the house is used to pay off the balance. You can use the calculator found here to estimate how much money you might get: https://reverse.mortgage/calculator.
- Play Catch Up
If you weren’t able to max out your yearly IRA and 401(k) contributions and you’re at least 50 years old, you can start playing catch up. You’re allowed to pump more money into your retirement plan than you were before. So, if your fund isn’t as fat as you’d like, you still have time to add to it.
- Pay Off Your Debts
Life is expensive. Many people spend their lives financially crippled by debt. If those debts are carried into retirement, it’ll lessen your enjoyment. You won’t be able to live a carefree life. Becoming debt-free by the time you officially retire will give you the freedom to spend your money on your lifestyle instead of paying old bills.
When you’re ready to start tackling your debt, sit down and start adding up everything you owe.
- Refine Your Budget
If you eliminate some of your splurges from your budget, you’ll have more money to use on your retirement. Only you can determine what your comfort level is and what you’re willing to cut out. An easy way to trim your budget is to stop eating out so often. Take a bagged lunch to work instead of eating out, skip the morning Starbucks runs.
- Corral Your Assets
Surprise raise at work? Instead of spending the money on entertainment, buy yourself something small and put the rest toward your retirement. The bigger your nest egg is, the more comfortable you’ll be when you stop working. People who run out of funds when they’re older are often forced to re-enter the workforce.
- Set Up an Emergency Fund
Unexpected expenses can wipe you out if you’re not prepared. Most financial advisers recommend having at least three months of living expenses set aside for emergencies. That way, when something happens, you won’t have to go into debt to maintain your lifestyle. If you still have the fund when you retire, you can add it to the rest of your retirement money.
- Be Realistic
Spending your retirement lounging on the beach and sipping Mai Tai’s is unattainable for most people. If you weren’t rich before your retired, it’s unlikely that you’ll be able to live a life of luxury. However, that doesn’t mean that you can’t be comfortable and happy. Just be realistic about your lifestyle.
- Don’t Collect Social Security Until You Need to
You’re legally entitled to social security benefits when you turn 62. However, if you avoid taking payments until you’re 70 you’ll end up with more money. You can still sign up for Medicare when you’re 65, even if you haven’t started receiving Social Security yet.
People often retire around age 66 or 67. Would this work for your life?
- Pick a Plan
The sooner you determine what you want your life after retirement to look like, the sooner you can work out your plan for yourself. You can determine how much money you need to survive.
You can end your days in comfort if you plan your retirement correctly. The key is making sure you have enough money to pay your bills.
Rachel Slifka is a freelance writer and human resources professional. She is passionate about helping fellow millennials find success with their finances and careers. Read more by checking out her website at RachelSlifka.com.