If you’re afraid you might be working well into your 80’s, you’re not alone. Making a few simple changes to your current lifestyle and retirement savings plans can go a long way toward securing your financial future. Watch this video to learn how to plan for retirement with some of my favorite savings tips.
Plan for Retirement with These Savings Tips
1. Make sure you’re getting the match on your employer’s retirement plan.
- This is an easy one, but you’d be surprised how many people still aren’t taking advantage of their employer’s match.
- Right now is open enrollment for a lot of companies. Your employer may be offering free financial workshops. Go to them!
- Meet with your HR rep and increase your 401k contribution up to the match. If you’re already getting the match, increase it by 5% extra. You’ll barely notice the difference!
2. Open and contribute to a Roth IRA.
- These are magical accounts. They have only been around since the late 90s and I have a feeling one of these days the government might get smart and phase them out. So take advantage now, while you still can.
- The max for 2012 is $5,000. That’s about $417 per month. Might sound like a lot, but if you can swing that + contribute to your 401k plan, you’ll be on the right track for your retirement savings.
3. Downsize your living situation
- The single biggest expense any of us has is our monthly rent or mortgage payments. One of the easiest ways to find more money for retirement savings is to reduce your monthly housing expense.
- Figure out your take home pay (whatever gets deposited into your bank account) and see if you can reduce your housing expense to 25-33% of that amount.
- Example: A family making $50,000 a year would mean a rent or mortgage payment that is $800-1,100. The lower the better. If you were previously paying $1500, getting down to $800 results in $700 per month you can put toward retirement.
4. Don’t Overpay on Student Loans
- There are no loans when it comes to retirement. Many people feel stressed about student loans and want to pay them down as quickly as possible. But the reality is you can only afford so much in any given month.
- Come up with a plan to balance your student loan payments with your retirement savings. A good goal is to make the monthly amounts as similar as possible. In other words, if your student loan payments are $350, then contribute $350 to your retirement account as well.
5. Ditch the Fancy Car
- Cars are expensive, and really they’re just a means of transportation. Beyond having something safe and reliable, everything else is just extra money you could be putting toward retirement.
- Look for something with good gas mileage, and preferably something you can buy with cash. Taking out a loan for a car payment is almost never a good idea.
View the original video on Yahoo! Shine.