According to the Department of Labor, only about 40% of Americans have calculated how much money they’ll need to save for retirement. Retirement is an important goal for most workers. We all want to be financially stable, especially as we get older and can no longer work. But most people have no idea where to start.
But when you break it down, there are a lot of things you can do now. You can start saving and lay a sturdy foundation for your later years.
Today, we’ll discuss six small ways that you can start saving and planning for your retirement today.
1. Consider Your Investments
Investing is a great way to grow your money. With most investments, you’re in it for the long game. You won’t see a return for some time but being smart about how you invest your money is key.
There are many types of investments and a diverse range of incomes associated with them. For example, if you have dividends from your stocks, you can use them to cover certain expenses down the road. To make the process simple, try using a stock dividend calculator.
Another tip: add a variety of investments to your portfolio for added financial security.
2. Check if Your Employer Offers a Retirement Plan
Many employers offer a 401(k) plan to full-time employees. If they do, they will deposit a portion of your salary every month (or another interval) into that account, which contributes to your retirement savings.
If you add some of your own money to the plan, some employers will match your contributions. If your employer doesn’t offer a 401(k), suggest that they start one, or considering transferring to an office that has 401(k) plans available.
3. Look Into Your Pension Plan
A pension plan is fully funded and sponsored by your employer, unlike a 401(k) which is usually funded by you. This plan, also known as a defined benefit plan, is based on a formula that factors in different personal factors such as age, number of years with the company, and salary.
With pensions, you are also entitled to pre-determined regular pay-outs after you retire. If you are changing jobs, research what benefits you may still be entitled to.
4. Start an Individual Retirement Plan
In addition to an employer-based retirement plan, you can start saving by using an individual retirement plan.
There are two types to choose from: there is the normal individual retirement account (IRA) and a Roth IRA. With most IRAs, you can deposit up to $6000 annually. If you are closer to retirement age, that amount usually increases. IRAs also provide certain tax advantages.
5. Learn More about Social Security
Once you retire, you should be eligible for social security benefits. Because you don’t know how much you’re getting until you receive it, sometimes it’s hard to plan around. But there are some helpful ways to estimate. Try the retirement estimator available on the Social Security Administration’s website.
6. Think About Where You Want to Retire
This has less to do with putting money away, but it may determine your overall costs. Most people will retire where they’ve always lived. But you may choose to retire somewhere else.
If you live in a colder part of the country, for example, you may want to live somewhere warmer for your health and happiness. Or you may want to move closer to family.
These tips are meant to guide you, but you should continue to do your own research as well. No matter what you envision for your retirement, remember that it requires planning and carefully mapped out goals. Don’t wait until a few years before to start thinking ahead!