How to Plan Your Retirement
Save Now, Spend Later
Every month we get our paychecks and look forward to spending what’s left after bills and living costs. As tempting as it is to treat yourself, put aside a portion of your paycheck each month. Ideally, you should already do this, but it’s never too late to start. Try to save 15% each month and you’ll see your retirement savings grow.
You should also look at retirement savings accounts and at how to make the most money from your 401K plan. If you don’t have a 401K, then open an IRA (individual retirement account). The accounts offer similar savings to a 401K, but they aren’t tied to your job.
Use Retirement Planning Tax Breaks
If you pay into a 401K plan, you can avoid paying any income tax as long as the amount is under $18,500. When you turn 50, this amount increases to $24,000 so there are a lot of opportunities to save money. There are also no requirements to pay any tax until you withdraw the money. If you’re on a low income, then you can get further benefits in the form of saver’s tax credit. This gives you an incentive to save more for the future, knowing the government will reward you. There are loads of programs available, so do your research to ensure you get the best possible deal.
Invest
Being young means you can take risks, like investing in that crazy start-up. Everyone knows that investing in stocks can mean a lot of money, but wisdom comes with age. Think about your future and consider all the possibilities. It’s easy to recuperate your losses when you’ve got years to do it, but making wise investments guarantees you a steady retirement fund.
You can also make money by downsizing your property or car. Loads of housing developments offer homes in retirement communities, which can give you a fantastic quality of life. Consider moving to a smaller place and spend the extra cash on things you enjoy.
Take Advantage of Medicare
Most jobs give employees health insurance benefits, but this stops when you retire. Senior citizens are eligible for Medicare when they turn 65, so you’ll need to budget for the plans. Most people choose standard care, which is Parts A & B, but other plans are available for more complex health issues.
Some people are automatically enrolled in Medicare, but you might have to enroll yourself. Failure to do so results in a penalty and increased monthly premiums. You have seven months to enroll in the program from when you turn 65 or give up work. It’s easy to compare plans on the Medicare website, but consider your long term health needs when choosing a plan.
Lose The Debt
In today’s economy, it’s easy to purchase items on your credit card and pay them off later. However, credit card debt can cripple, and it can reduce your chances of a happy retirement. Don’t leave your debt unpaid, you need to reduce it as soon as possible. Aim to be debt-free by the time you retire and set up a proper payment plan.
If you want to enjoy your retirement then saving money is critical. Retirement is the time to relax, and be rewarded for your hard work, so plan it properly and enjoy it.
