Everyone deserves to have a comfortable retirement after decades of hard work. But to so many Americans, saving for retirement seems complicated, intimidating, and a choice that can be postponed for the future. However, there are so many little choices you can make every month to start saving for retirement–and they aren’t difficult at all!
All you need to know are a few practical basics on how to start saving for retirement. Sometimes you just need a jump start to get you going. Once you begin saving, you will feel more comfortable about the process and adjust how much and how often you allocate funds.
Here are some great ways to start saving for retirement:
- Have an Emergency Fund
You might think an emergency fund has nothing to do with saving for retirement. But if you have no emergency fund and you experience a financial emergency, where will you turn for cash? That’s right, your retirement fund! Cushion yourself for unexpected bills with at least $500 to $1,000. That way, all the money that goes into your retirement fund will stay there!
- Pay Off High Interest Debt
This might seem unrelated to retirement as well but if you have debts collecting interest, then you are losing money you could be investing in high interest retirement accounts. Try to pay down a majority of your debts by prioritizing higher interest debts. These debts can include credit cards, title loans, auto loans, and student loans to name a few.
- Regular 401(k) Contributions
If you are lucky enough to have an employer sponsored retirement plan like a 401(k) or a 403(b), then take advantage. Many companies will match your contributions, meaning that you will receive even more in your savings right away! Contribute to your retirement account often and regularly to start saving off on the right foot.
- Create a Financial Goal
After you’ve taken care of various other aspects of your personal finances and really got your 401(k) going, it’s time to sit down and create a financial goal. Once you feel comfortable, take on a more aggressive savings plan. Determine how much you’d like to have saved by the time you hit retirement and when you would like to retire. Do the math to figure out how much you are aiming to save monthly or annually.
- Figure Out Where to Put Your Money
Where you place your savings depends on how many years it will be sitting and gathering return. For shorter term investments, you can look at online savings, money market accounts, or short-term bond funds. For longer term accounts, you could look into a Roth IRA, traditional IRA, stock investments, etc. If there will be a large amount of money going untouched for a few decades, you want that money to accumulate as much interest as possible, so you get more bang for your buck.
You don’t have to be overwhelmed by the thought of how to start saving for retirement! When you come at it from the right mindset, saving for the most relaxing chapter of your life can be simple. Give yourself peace of mind knowing that your future is secure by starting to save today!
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