If you haven’t started saving for retirement already, you aren’t alone. The rising cost of living has made it harder for young adults to save for their future, even when they have stable jobs with a predictable salary. Retirement planning can be stressful at any age, but it tends to cause more frustration as you get older, and things only get more expensive. That’s why your 30s are the prime time to capitalize on your youth and invest in your future. These six retirement planning tips will help you start saving more, so you can worry less later.
Set Up Automatic Withdrawals
Now is the time to get serious about retirement saving, and to make it easier, you can have money automatically taken out of your checking account each month. With a high yield savings account, you can automatically put away a specific amount to fund your retirement. The more you can save, the better. Having a surplus will offer greater financial flexibility whenever you need it most.
Start a Money Market Account
A money market account is a type of high-interest savings account through a bank or credit union. It allows you to generate more interest faster on your savings or checking deposits, and they can even come with their own debit or credit card. Banks and credit unions generally require you to maintain a minimum amount while your account is active. There is also a cap on the max amount of money you can generate interest on, so keep that in mind while you’re planning your budget.
Get Life Insurance
Life insurance is not just for protecting your loved ones. While no one likes to dwell on dying, if the unthinkable happens, it’s nice to know that your family will be covered financially. Beyond that, you can use life insurance to generate interest over a period (30-50 years) and then sell it for a lump sum of cash in your 60s or 70s. If you’re interested in scaling back on expensive whole life insurance without getting rid of the protection for your beneficiaries, you may wonder is term life insurance worth it? This policy only lasts for several years before you must renew it. Learn more about it in an online guide.
Diversify Your Investment Portfolio
You never want to put all your eggs in one basket with investment. A diverse portfolio comes with lower risks, making it a stronger bet for retirement saving. The idea behind diversification is that the more you invest in different things, the more money you’ll yield. Some ways to diversify your investment portfolio include ETFs (exchange-transfer funds), real estate investment trusts (REITs), and index or bond funds. Consulting with a financial advisor is the best way to find out which types of investments would be most profitable for your future while respecting your current budget.
Scale Back on Spending
We know you’ve heard it a million times, but it’s true: the best way to save is to spend less. Stop eating out, consider buying generic vs. name brands, and even drop your Netflix subscription for a month or two when you really aren’t watching that much. It is not uncommon to be fearful of retirement in terms of living on a fixed income and these small spending habits add up, and you might be amazed at how much you can save in just a short period of time. Doing short savings challenges throughout the year, like a week without buying anything, can have a major impact on your budget.
Consider Opening an IRA
Earnings on a Roth IRA are tax-free, which can make them a great way to increase your retirement fund without paying for it. You can also opt for a traditional IRA plan if you don’t qualify for a 401(k). Traditional IRA contributions earn a tax deduction, and your earnings are tax deferred. There are always multiple ways to save for retirement, so explore the pros and cons of IRAs vs 401(k) accounts while you contemplate the best choice for you.
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