Not everyone can become a millionaire overnight, but everyone can save up enough money to retire – if you are diligent and disciplined in your savings plan. Saving for retirement can be hard, especially if you work a low-wage job, but it can be done. It often means living below your means for a while and having a disciplined budget. If you aim for the $1 Million Dollar retirement, you can save up enough money to help you make it through your retirement, even if you do not make the $1 Million dollar mark.
1. Start your retirement savings as early as possible and do not think you have to retire at 65. It is best to start saving by the time you are 25. If that is not realistic or you are starting late, don’t panic. Start saving now. The longer you save, the more you will have for retirement. You can stretch out your work time beyond 65, so long as you are able to work. This will give you more time to save.
2. Pick a target number to put into a retirement savings account each week. If you have 40 years to retirement and $35 a week to put into a retirement savings with a growth mutual fund, you can retire with anywhere from $800,000 to $1.5 million in your account. If you have less time, then adjust the weekly amount accordingly. Experts recommend that you save 15% of your weekly income for retirement. You will want to adjust that according to your budget and your time to retirement.
3. Choose investment accounts with low or no cost. Shop around. If you are setting up an Individual IRA, find a retirement account that you can invest in with little or no cost to you. Save money in a low/no cost savings account until you have enough to put into an investment account to cover any minimum balance requirements. When choosing investments, insist on low (less than 1%) or no cost growth funds. If you invest in a 401(k) you may have less wiggle room to choose fee costs. Read information carefully to find the investment that will get you the best return, lowest risk, and lowest fee cost.
4. Take advantage of 401(k) and your 401(k) match programs. Your 401(k) is your easiest way to budget retirement savings because we often create our budgets based on our net income, not gross. Start saving in a 401(k) as soon as it is available to you. If your employer offers a match, invest enough to receive it. You will save more if your employer is helping you.
5. Do not take loans or withdrawals against your retirement account. Loans are money that you’re not saving. Withdrawals are money you are taking from your savings and extra taxes you have to pay. If you have an emergency, exhaust every other avenue available to you before you dip into or borrow from your retirement account. If you are considering buying a house, delay the purchase until you do not need to withdrawal from the plan to help make the down payment.
Also Read: How to Build an Emergency Fund Quickly
6. Increase your savings as circumstances change. Did you get a raise? Increase your savings. Kids out of the house and expenses are down? Increase your savings. Are you no longer buying diapers and formula? Increase your savings. Check your budget every year at least and see where you can put more aside for your retirement savings.
7. Get out of debt. Any debt you have is money you are not saving. Pay off your debt as quickly as possible and stay out of debt. Budget below your means so that you can pay off the debt and still start your retirement savings.
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