Are you ready to have your blood pressure go through the roof? Listen to this…
If the mere mention of retirement is enough to send you screaming for the hills, you are not alone.
Three out of every ten Americans claim they are stressed about getting ready for retirement.
Whether you are a Millennial fresh out of college, a Gen Xer raising kids or a Boomer nearing retirement age, these steps to preparing for retirement can take the anxiety out of planning for your twilight years.
Small Steps Yield Big Savings
If you are just starting out, chances are retirement is the furthest thing from your mind.
Even when your paycheck is stretched thin, it is important to take advantage of compound interest. This means that the longer you allow your money to gain interest, the more interest you make on your original investment and the earned interest.
As effective as this concept is, it requires time. In fact, for every year you delay saving, you will need three to catch up. Setting aside something, even a small amount, will pay off big time in the future.
Time for a Financial Reality Check
Curious how much you will need for retirement?
Unfortunately, there is no “magic number.”
The amount you will need after retirement depends on many factors you cannot control – how long you will live, how healthy you will be, hobbies you will pursue, and how you will handle emergencies. It’s no wonder that CNBC reports 81 percent of Americans have no idea how much money they will need to retire comfortably.
That is why it is important to run several scenarios during the planning process to account for all possibilities.
Failure to Plan = Planning to Fail
Financial advisers are great at mapping out a plan that will take into account your current income, your savings goals and available investment options.
Not only can they address your long-term goals, they can help you uncover ways to set aside money for emergency expenses that could derail your retirement savings.
As a basic rule of thumb, people should save 15 percent of their pay over a 30-year career.
Take Advantage of Free Money
While there may not be such thing as a free lunch, there may be free money that you are leaving on the table.
Many companies offer a 401k match for every contribution you make up to a certain percentage of your income yet Millennials are 8 percent less likely than their Gen Xer counterparts to participate in a company-sponsored 401k plan.
Even if your company doesn’t have a matching program, putting money into a pre-tax retirement account offers tax benefits that could yield a significant savings come April 15th.
The only way to become an expert on retirement savings is to ask as many questions as possible.
Even though 72 percent of Millennials admit that they aren’t familiar with retirement savings strategies, only 36 percent seek help from a financial planner.
Stop gambling with your future and begin today to plan for what will happen when you retire.
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