If you’re not good at saving money, saving for your retirement can be stressful and overwhelming. But don’t let the pressure get you down. There are several tips and tools to help you prepare for your retirement years. Knowing your retirement options can put you on the right path, as can a retirement savings calculator, by which you can estimate the future value of your retirement savings.
But even with all this information, you may question whether you’ll have enough to get through your retirement years. You can’t predict the future, but these four tips can create a smooth transition:
Up Your 401(k) Contribution
If you’re participating in an employer-sponsored retirement savings program, consider upping your contributions. Upping your contribution is an excellent move, especially if your employer offers a match program. If you set aside a greater percentage of your income, there’s more opportunity to grow your retirement savings. You don’t have to increase your contribution by a lot. For example, if you’re currently contributing 2% percent of your income, consider upping your contribution to 3% or 4%.
Set Aside 10% of Your Income
Don’t put all your eggs in one basket–the cliche is true. It’s dangerous to rely on one form of retirement savings. In addition to your 401(k), you will eventually be eligible for Social Security benefits. But your retirement income shouldn’t stop here. It also helps to have a good balance between your money accounts.
Each pay period, take about 10% of your income and deposit this money into a savings account. For a higher return on your money, skip your regular savings account and open a high-yield online savings account. The funds in this account can serve as a financial cushion during emergencies, and if you allow the money to grow for several years, it can contribute to your retirement income.
Pay Off Your House Before Retiring
The sky is the limit if you don’t have a mortgage payment. Housing is probably your biggest expense, and eliminating this expense can stretch your retirement savings. Of coarse, paying off a house is easier said than done. To reach this goal, consider a shorter mortgage term or perhaps a biweekly mortgage.
Never Touch Your Retirement Savings
You can’t grow your retirement savings if you constantly take money out of the account. I know, seeing a huge balance might burn a hole in your pocket. And you can probably think of a million uses for the cash. But rather than focus on the present, keep the future in mind. The larger your retirement savings, the sooner you can retire. Plus, a larger balance will contribute to a more comfortable lifestyle.
If you don’t know all the options available to you, now is the time to speak with a financial planner. A financial planner has experience in different areas of personal finance. Whether you’re trying to pay off debt, build your savings account or plan your retirement, a planner can put you on the right path.