Saving for retirement is a cornerstone of planning for your financial future. After all, for most people, there comes a point where they will stop working and will therefore need to depend on money that they have set aside over their lifetime to carry them through their years of retirement. Sure, there are other sources of income for retirees like Social Security payments, but this will only be sufficient to put individuals just over the poverty line. Thus, having sufficient retirement funds set aside is absolutely crucial. Continue reading for a comprehensive guide on saving for retirement.
THE SINGLE GREATEST RETIREMENT MISTAKE
Let us begin by highlighting the single greatest mistake that most Americans make when it comes to saving for retirement: not saving enough money. Having sufficient funds set aside (and additional funds as a cushion), is extremely important. After all, when you retire and exit the workforce, the last thing you want to have to do is to scramble for employment if you realize you have not set aside enough money.
Having a cushion is particularly important given the unpredictability of life. Perhaps you have a medical emergency or some other unplanned life event. This could eat away at your retirement funds significantly, which can be a big problem down the road. Given that nearly 1/3 of Americans have less than $1,000 in retirement savings, this is clearly an issue that many people are continuing to struggle with.
THE IMPORTANCE OF SAVING EARLY
Most financial guides will tell you that it is better to save early rather than later, and this is very much true! The earlier you save, the more time you will have to accumulate funds. Better yet, when you put your retirement funds into investment accounts, they will have more time to grow in value if you put them into the market earlier rather than later. It is important to acknowledge, however, that saving early is not always feasible for everyone. For example, some people may have too much of a financial strain day-to-day to have anything left to contribute to retirement. In this case, it is critical to know the best strategies for last-minute saving in order to ensure you have enough money set aside for your future retirement.
LAST-MINUTE RETIREMENT SAVINGS STRATEGIES
If you are beginning to save for your retirement later rather than earlier, then there are several strategies that can help you save effectively and efficiently:
- Max out your IRA – take advantage of the maximum limits on tax-deferred accounts
- Reassess your cost of living – if you are living in a particularly expensive area, you may consider moving to a less expensive area
- Watch out for your health – doing so can lower the probability of expensive medical bills or health emergencies
Doing even just one of these can significantly boost your retirement savings, so take stock of what seams reasonable for your current financial situation and go from there!
Overall, saving for retirement can feel like a daunting task, especially if you have not yet begun to start saving and are nearing retirement. The key is to remember last-minute retirement saving strategies and to act now because it is never too late to start saving!