Some people think retirement is nothing but a pipe dream but that does not have to be the case even if you have not really planned for your own retirement. But there are some rather easy and simple things that anyone can do to bolster their retirement savings. And the best part is most do not take much effort on your part and can be done without you realizing what it is you are doing. And that is building a nice sized nest egg in most instances. So now we will examine five simple ways in which you can make sure you have the retirement you want and deserve.
First, you need to create a vision for your retirement. Without a vision, you cannot be certain of how you will get to where you want to be once it is you retire. And many people have grand plans for their retirement and why not? They and you deserve to experience all that life has to offer, and part of that life is your retirement years. With a vision for your retirement, you can develop a plan in which to achieve that vision. With no plan, it is extremely difficult to reach your vision of retirement. So think for a few minutes to see what you want your retirement to look like and create a plan now that will help you achieve that vision.
Another simple thing that can lead to a nice nest egg is simply saving your snack and change for the day of at least $5.00. As simple as that sounds let us look at what a simple $5.00 a day or $100 a month can do for your retirement fund. If you are in your 40’s that will give you about 20 years to save these funds and at a respectable 10% return, and you can end up with about $75,000 with little effort. If you started ten years earlier and saved the same amount for 30 years, you could have approximately $200,000. And for those who start in their 20’s and save for 40 years or so you would have an amazing $600,000 saved for your retirement. With those kinds of figures, I think we can all save $5.00 a day from the work week.
People tend to confuse wants and needs in their lives. Let us look at transportation as an example. Most people in the US do need a car to run errands and get to their place of work. But what kind of car may not be a need and more of a want. Not everyone needs the latest and best car to live their everyday lives. I have had my Jeep now 11 years this May. For the last six years, I have not had a car payment while maintaining my Jeep in excellent condition.
Now my payment for my Jeep was around $500 a month which if saved instead of paying for the car after say ten years a person with a 10% return they would have approximately $105,000 saved that could be used to buy a less expensive car and used towards retirement. As we all know anyway, cars are not investments but rather are money pits that if we plan properly, we can avoid. Remember not all cars are created equally and no we do not need the most expensive car to survive.
If you can save 15% of your gross income in a retirement account. Always save at work in a plan that matches any contributions that you make to the plan. Otherwise, you are leaving free money on the table that is an instant return for you. My plan matches the first 5% of my contributions, and I elect to save mine in the ROTH portion of the plan. The company match portion is placed in the Traditional portion as those funds have not been taxed yet. Then I elect to save in a ROTH IRA until it is maxed out then I switch back to the workforce plan until I reach the 15%. That way I have a variety of funding sources in retirement and am still able to achieve the 15% target.
It is never too late to start or to think of an alternate plan to fund retirement. I am sure you are like me and have seen the articles that state most Americans have nothing saved for retirement or it is a figure of something along the lines of less than $10,000. While many people may not have saved for retirement, that may have kept themselves out of debt and live in a house that is paid off in full. Well, that house can be a source of your retirement funds it is worth more than you paid for it. Most houses have appreciated in value over the last 30 years so consider selling the house and renting something smaller that will have less in the way of utilities. And the upkeep is not your problem as it is the owners and you are now a tenant.
Finally, try not to collect Social Security until at least age 67 if that is your full retirement age. Otherwise, you will shortchange your benefits by about 6% a year that you take the benefit early. If you retire at age 62, that is almost a 30% reduction in your benefit for the life of your payments. It does not automatically bump up at age 67 to 100% but rather stays at the 70% you elected when you started your payments. And if possible delay taking your benefits until age 70 and you will get 124% of your benefit for life. Think about that for a second, a 24% raise for the rest of your life.
These are some helpful tips that do not take a lot of effort to implement and can make a very lasting effect on your retirement. If you need any additional help or have any questions, please feel free to contact me or leave a comment here.
