Fact: Retirement is expensive! An American spends an average of two decades in retirement, and in those 20 years he needs to have 70-90% of their pre-retirement income to maintain a ‘good’ standard of living. Can you do this?
While this sounds taxing, you can live a decent life by preparing for your future right here, right now! Here are several tips that can help you plan a decent retirement:
Learn more about your company’s retirement plans
Nowadays, there are two types of plans offered for employees: 401(k) and the traditional pension plan. If your company offers the former, sign up for an account and contribute the best amount you can. By availing of this plan, your taxes will be lowered. You don’t have to worry about deadlines and due dates too because you can sign up for fuss-free automatic deductions.
But if your company offers the traditional pension, better ask your employer if you are eligible to get one. Determine your benefits by asking for an individual benefit statement. Should you decide to switch jobs, ask the employer what happens to your account. Sign up for a pension plan care of your spouse’s company if possible.
Educate yourself about your social security benefits
Apart from your pension or 401(k), another plan that will let you live a comfortable life upon retirement is your social security account. Retirees can receive as much as 40% of their employment retirement on a monthly basis.
Do not be tempted to break your retirement savings bank
Maybe there’s an emergency that necessitates you to pay a big sum. While the thought of touching your retirement account is very tempting, don’t! This will make you lose money in the long run because you will reduce the principal amount and consequently, the interest it will generate. You might also end up losing tax benefits, and worse, paying hefty penalties.
Save, save, save!
Even if you have a pension and a social security account tightly in place, it would not hurt if you create your own retirement account. This can be your source of emergency funds when worse comes to worse. With this at hand, you do not have to touch your pension or 401(k) for big, unforeseen payments or purchases. However, this does not mean that you should withdraw from it whenever you can.
Preparing your future should start today. Make sure to follow these tips in order to have a comfortable life when you retire.
Readers, what are you doing in order to live the good life in retirement? How do you plan to replace your pre-retirement income and how much are you aiming for?