If you’ve had
dreams of retiring to a life of excess, relaxation and comfort, you’d better
start planning now. While the prospect of saving might be unappealing, it could
make you rich in the future. If you
don’t want to get stuck with all the old folks in Florida, it would be wise to
start considering your options. If you’re in your twenties, you’re in the
perfect position to set to be a saving machine. Ways to do that include:
Contribute to a 401(k) Get the magic of
compounding on your side. Save
as much money as you can as early as possible. Although it’s never too late to
start saving, if you’re in your fifties and haven’t started saving yet, there
is not a ton of advice for you. Contribute as much money as you can to your
company’s 401(k), as most businesses will match every dollar, you get an
immediate tax deduction, and receive tax-deferred growth on your savings.
IRA IRAs offer pretty huge tax breaks. There are two types to
consider: Traditional, or Roth. A Traditional IRA offers tax-deferred growth,
while a Roth IRA offers tax-free growth, but doesn’t allow deductible
contributions. There’s something very powerful about compounding growth. Take
advantage of these types of retirement funds as soon as possible.
Set savings goals Lots of people are pretty relaxed about their spending
habits. It’s easy to get into patterns of spending on food and entertainment. Be
deliberate about your purchases and savings. Do you really need to buy
breakfast on the way to work everyday for $6, or could you start the morning at
home making a couple eggs and bacon for two dollars? These seemingly minor
decisions can have a huge impact on your future wealth. Start making goals
today. How much will you save this month?
Skip “things” Have you ever heard of the terms “old money” and “new money?”
It’s typical of folks with new money to buy lots of things; clothes, cars,
jewelry, first class tickets, expensive dinners... Celebrities and professional
athletes often fit this bill pretty well. The problem? They can lose everything
as quickly as they made it. Physical things lose their value almost immediately
after purchase. Invest in the stock market or in a property that you can
develop and invest in over time. Buying luxury brands is silly (sorry Gucci
lovers), and ultimately you’ll pay for it when you “retire”- but it will feel
less like retirement, and more like working in retail when you’re 70. Bummer.
Pay off debt Similar to retirement funds, pay early and often. Debt can be
crushing. It can destroy your life in the blink of an eye. Spend within your
means. Just because your credit limit was raised does not mean you should max
out your cards! It’s best to only use 30% of your credit at any given time.
Don’t leave your kids with your mountain of debt to deal with. Pay what you owe
as soon as you can, so you can live without stress in the future.
Contribute to
retirement funds as early as possible in your career and they will definitely
pay off. Set goals for savings and spending for the next five years, and be
okay with not buying “things,” and don’t let debt control you. If you can manage this, you’ll improve the odds of being off to a great,
sunny and relaxing retirement.
About the Author: Peter Walters is
a freelance writer and covers home protection and social media.
0 comments:
Post a Comment