It’s never too early to start thinking about your retirement. Most people don’t think about it until it’s too late. And who can blame them? When you’re in your 20s, saving for old age is the last thing on your mind. But if you want to get ahead and start your retirement plan early, here are some useful tips.
Consider how you want your retirement to look
Are you planning to spend your twilight years yachting around the world? Well, you might need to save a bit harder than others. There are two schools of thought – save up as much as possible or spend your money when you’re young and healthy. However, you definitely need to pick the first if you have grand plans for your retirement. You can even start to make a budget for your retirement and work out how much you’ll need. Just remember to consider inflation and other factors.
Start your retirement fund as early as possible
No matter how much you earn, it’s a good idea to start your retirement fund as early as possible. Even if you’re just putting peanuts in, the interest can be significant if you start early enough. The key is consistency. Try and put 10% of your salary into a pension or 401K plan, and you will have a significant pot by the time you’re ready to retire.
Use pay rises to add to pension
When you get a pay rise at work, it’s easy to get excited. But ask yourself – do I need to spend the extra money now? You’ve been living on your current salary, so why not add the difference into a savings account for your retirement. This will allow you to retire early and enjoy the finer things in life.
Maximize employer contributions
Check out the pension contributions that your employer offers. Sometimes they are standard across the board, but occasionally employers offer additional contributions. This can be a great way of getting free money. Think of it as an optional extra salary – who wouldn’t take that?
Add a lump sum
If you have recently gotten a windfall, why not add it to your retirement fund? When a relative leaves you money in a will, it’s tempting to spend it on something you wouldn’t normally buy. But adding a lump sum to your retirement fund just means that you can access it later. Plus, you’ll benefit from the interest.
Don’t spend unnecessarily
Unnecessary spending is the key to an unhappy retirement. Just because you can afford a high-end sports car doesn’t mean you should buy one. Maybe it’s time to think about selling ferrari or other luxury cars you might have and put the money into your retirement fund. Consider your lavish purchases and think about how they’re going to affect you down the line.
Make smart investments
You don’t need to be a millionaire to start investing. There are a ton of smart ways to invest as little as $1000. From stocks and shares to money-lending, you can make your money go further if you’re willing to do the leg work.