When you think of planning for retirement, you may assume that it will be quite some time before you are ready to retire. Plus, you may not feel as though that day will ever get here. The economy often makes it feel like you will be working forever.
Plus, there is so much life to be lived, and there is no way to know what the future will bring. Even so, you should take the concept of retirement to heart and plan accordingly.
There are four pointers listed here that will help you plan for retirement, and while each one is unique, you should be prepared to add them to your routine. You don’t need to be a financial expert to retire well, but you must get started with these simple steps.
Layer Your Savings and Insurance Plans
When you plan to save for the future, you should not open a single savings account and hope for the best. The wisest savers will open several accounts that all serve different purposes.
The best retirement plan includes:
- 401k or pension plan
- Personal savings account
- Roundup savings account
- Personal investment account
- Multiple term life insurance policies
- Whole life insurance
Your employer likely offers a retirement account or plan that you should buy into immediately. You can rely just on this plan, but it is best to make other calculated purchases that will increase your net worth over time.
A personal savings account helps you keep money out of the “purchasing account” so that you have a little cash for a rainy day. Roundup savings simply add to your savings account by rounding up to the next dollar for each purchase and putting a few cents back into savings.
A personal investment account can easily grow over time, but it should be managed by a licensed and certified expert who understands which assets best suit your needs.
Finally, life insurance can easily increase the value of your savings for yourself or your family. If you purchase term life insurance policies in three to five-year intervals, your family will see a financial windfall if you should pass away unexpectedly. A whole life insurance policy or annuity account, on the other hand, invests money on your behalf, allows for lending out of the account, and can even pay dividends in the future.
Keep in mind that you must pay premiums on these insurance policies. As a result, you should budget for each premium carefully before purchasing.
Invest Conservatively
When you are investing, it is wise to speak to a professional who can help manage your portfolio. As you speak to your investment advisor, ask them to be as conservative as possible. Put your money in bonds, ETFs, and blue chip stocks that are almost guaranteed to grow.
You should also ask your investment advisor if they can recommend any dividend stocks that will grow your portfolio that much faster. With a dividend stock, you are paid a dividend every month, quarter, or year that you can invest back into your portfolio. Never take the cash for yourself.
Now that you are funneling money into an investment account, earning extra money for that account, and holding your investments for long periods of time, the value of your retirement accounts will skyrocket until the day you retire. Yes, results may vary, but this is a simple way to invest that cuts out quite a bit (but not all) of your risk.
Round Up Purchases
Using a roundup platform ensures that all the extra change you used to keep in a coffee can or jar will go into a savings or investment account. There are several platforms on the market that aim to round up your purchases to the next dollar, including those you can tie to your debit card.
This may seem like a small thing, but look at how many purchases you make in a month. Now, multiply that number by 12 and multiply that total by 30 years. You see now that there are many dollars to be saved if you start rounding up right away. There’s no need to gather change in your closet when it can be actively invested or produce returns based on your current interest rate.
Trim Your Budget
No one is suggesting that you should not enjoy your life while you’re living it. Many people do not make it to retirement, and they deserve to enjoy their life as much as possible. However, a retirement account is a legacy that you will leave behind for your family even if you do not have the chance to properly retire.
With that in mind, you should attempt to trim your budget of things that you truly do not need. This is not to say that you should give up all your comforts in life. That would be unwise and ultimately make you miserable.
At the same time, you should cut all the subscriptions and impulse purchases that have been eating away at your budget. The best policy for most of these things is to think them over for a few days before buying. Stick to your grocery list at the store. Focus on a few special things you enjoy so that you do not spend extra money on a thousand other little items.
With this plan you are bringing enjoyment into your life in a much more responsible way. Plus, all the money you would have spent can be pushed into the very same savings or investment accounts that were mentioned above.
Plan for Retirement Today and Prepare to Live Well
Utilizing the tips listed here, you can retire well and live comfortably on a timeline of your choosing. It is true that it can be difficult to get to retirement, but anyone can save and prepare using these pointers. While your financial situation is unique, remember that you can layer savings or insurance plans, invest conservatively, round up purchases, and trim your budget in an effort to retire happily.