When it comes to saving for retirement it is best to start sooner rather than later. Developing good savings habits early on will only benefit you in the long run. Here are some tips for you to develop better saving habits today and prepare for a better tomorrow.
1. Create a Spending Plan and Follow It
Although many would argue that allocating your resources isn’t always easy, the difficult part is actually maintaining it. Budgeting is not only a good way to keep yourself on track and know exactly how you are spending your income, it’s also a great way to put money away for retirement.
A good rule of thumb when it comes to saving is to put 10% of your paycheck into savings. One tool that makes saving for retirement so easy is the ability to set your contribution amount through direct deposit and forget about it. You never miss the money because you never see it.
Creating a spending plan will not only help you now and assist you in meeting your retirement goals, but will also help you transition into your retirement years when you’re living off of a smaller income. Developing good spending habits now will only benefit you down the road. (For more from this author, see: 5 Ways Women Can Save More for Retirement Today.)
2. Take Advantage of Employee Matching
Typically, employers offer contribution matching. If you can afford to do it, you should contribute up to the maximum amount your employer is willing to match. This is more money you can use during your retirement years that you would never get otherwise. If they offer it, take it!
3. Utilize Rollovers
Working the same job your entire adult life is now a thing of the past. We live in a time where people move fluidly between jobs much more than they ever did before. And although it may seem easier to cash out your current retirement account when the time comes for you to switch employers, it is more beneficial to roll over your account than to cash out and lose the investment potential of that money.
It is also common for people switching jobs to forget about their 401(k)s altogether and accumulate a bunch of accounts with small balances. This makes your portfolio extremely challenging to evaluate—utilize rollovers to counteract this. (For related reading from this author, see: Mistakes to Avoid When Investing in a 401(k).)
4. Evaluate All of Your Retirement Plan Options
There is no one-plan-fits-all when it comes to retirement. There are different strategies as well as types of retirement accounts to choose from. Different approaches may be taken when you begin saving for retirement depending upon your age, retirement goals, current asset holdings and many other factors. When making these decisions make sure you consider all of your options and invest in the help of a financial professional if necessary.
5. Start Saving Today
The most important thing to understand when it comes to saving for retirement is time. The earlier you start, the more time your investments will have to grow, leaving you with more money and more peace of mind during your retirement years. Get started today!
(For more from this author, see: Your 40s Is Not Too Late to Save for Retirement.)