There was a time, not so long ago, when Americans looked forward to retirement. After decades of hard work, they were finally going to enjoy themselves. But as life expectancy and the cost of living continues to rise, fewer folks can look forward to a trouble-free retirement. In fact, as much as one-third of people approaching it have no savings of which to speak. Consider the following retirement planning tips to help reverse this troubling trend.
1. Start Saving Today
According to government data, more than one-third of Americans rely on Social Security as their primary source of income. While the popular safety net is certainly helpful, it will not cover the costs of unexpected events. For this reason, it is imperative that all retired individuals have something in the bank to cover inevitable shortfalls. Whether you start putting away one hundred dollars a month or a single sawbuck, it is important to do so religiously, over many years. You'll be surprised at how much money you can accumulate with regular contributions and interest payments.
2. Reduce Spending
Even if you don't have much extraneous spending, there are always ways to cut back without much sacrifice. Shopping around for cheaper car, health, and life insurance can certainly help lower your monthly bills. You should also take a look at your phone, Internet, and cable fees. Last but not least, you can search for ways to save online. Whether shopping for food, clothes, or school supplies, there's no shortage of deals on the Internet.
3. Contribute To Your 401(k)
If you employer offers a 401(k) plan, and most do, you should participate. Not only do these plans offer greater savings potential than regular bank accounts, but they also give your employer the option of matching your contributions. Although not every boss is that generous, a growing number of them are.
4. Open An IRA
Specifically designed to help you build your nest egg, the right individual retirement account (IRA) can work wonders. For most workers, a traditional IRA lets them make tax-deductible contributions. What's more, investment earning can also grow tax-deferred until withdrawals are made much later on. There are also Roth IRAs that are funded with after-tax contributions, allowing for tax-free earnings and withdrawals. Because these accounts can be complex, you should speak to a retirement planning professional to find out which IRA is best for you.
5. Delay Social Security
The longer you can put off receiving Social Security payments, the more you will receive in the future. Even if you only delay for a year or two after the earliest age you can start receiving benefits (62), you'll get nice bump in your monthly check. You can actually defer payments all the way up to age 70 and receive more income in your later years. At present, full retirement can be drawn at age 67 and above.
Follow these simple retirement planning tips to help you prepare for your golden years.
