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Your retirement years will be sweeter when you have enough savings to provide for your family and still live a comfortable life. Contrary to popular opinion, you don’t necessarily need to be earning a lot of money right now before you can retire rich. Retiring in reasonable financial comfort is definitely possible for those who desire it. The question is, what retirement plans (and financial plans) are you making towards achieving those bigger dreams? According to self-made millionaire, Tony Robbins, building wealth begins with paying yourself first, but that’s not all. Here are a few financial strategies to improve your chances of living wealthily during your retirement years.
Save and put your money to work
David Bach, best-selling author and asset manager, believes that if you want your retirement years to be enjoyable, you need to put your money to work. You will also need to save your way up the ladder. For instance, consider allocating 10-20% of your monthly pre-tax income to your retirement account. Although saving that amount of money may seem impossible, you could do it if you automate the process. Assuming your annual income is $50,000, which is normal for US households, 10% savings amount to $5,000 a year. When you pay yourself after receiving your paycheck, your savings would attract huge compound interest over time. The good news is that irrespective of the weight of your paycheck, you can slowly build your retirement fund without much sweat.
Live within your means
You may not want to start living above your means when you are planning for a great financial future. Although the principle of living within your means is pretty obvious, some people ignore it. Consider cutting down your extravagant lifestyle and embrace the idea of spending less than what you earn. Sometimes it doesn’t matter how much you earn; your spending habits are what determines your net worth, and consequently your retirement wealth. To reduce your expenses, you may want to budget effectively and unsubscribe from unnecessary services such as entertainment programs. If you are someone who loves to eat out at expensive restaurants, you may need to check that habit as well.
Invest in stock early
Perhaps you already know that time is money. Another actionable tip to make enough money for retirement is investing early. Ideally, try to invest aggressively as if your future depends on it, especially as retirement often comes sooner than expected. In the current financial climate, interest rates on savings are relatively low. So, don’t expect to build a tremendous amount of wealth from only savings. For many investors, investing in the stock market is a better way to prepare for their retirement. Assuming you lack the requisite financial skills to study the stock market, you could seek help from experts. Experienced stock investors may encourage you to opt for index low fees or broad-market index funds; these are known to yield better returns than other mutual funds. Finally, to achieve your retirement dreams, you can obtain a free financial audit from financial advisors. Independent financial advisors can help you with your investment management and retirement plans.
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