Retirement is important. That’s why you should be wise when it comes to planning for your future. There are lots of different strategies out there, but some things make for better retirement plans than others.
Whether you’re just starting out or already well on your way, let’s explore some ideas that will help make a plan for a perfect retirement. Here are 6 things that make the perfect retirement planning strategy.
Get An Individual Retirement Account (IRA)
The first thing on the list is to get an individual retirement account (IRA). If you haven’t already, this is a great time to start saving for your future.
You can open up an IRA with a variety of different financial institutions including banks and investment firms; just make sure to look out for the best IRA accounts rates for the best returns.
An IRA lets you set aside some money from your paycheck – typically before taxes – that gets deposited into the IRA. There are rules about how much you’re allowed to deposit, as well as what type of investments you can make within the account but regardless of those restrictions opening or adding to an IRA is still a great idea.
Maximize Your 401k
If your employer offers a 401k plan, you should definitely take advantage of it. The benefits of a 401k are that you don’t have to pay taxes on the money when it goes in, and because it’s an employer-sponsored plan there’s a good chance that your employer will match some or all of what you put away. You can’t beat free money!
As with an IRA, there are certain rules and restrictions about how much you can deposit and withdrawals; always make sure to weigh these limitations against the importance of saving for retirement.
Keep Living Expenses To A Minimum
Living expenses like housing, food, utilities and transportation typically get worse as you get older (although if you’re good enough at frugal living, this may not necessarily be true), which is why it makes sense to keep these expenses to a minimum during your younger years. Here are tips to live frugally:
- Haggle, haggle, haggle! For everything you buy, consider setting aside time to try and negotiate the best possible price. You’d be surprised how often people are willing to go down in cost so long as it’s convenient for them.
- Stop subscriptions unless they’re required. If you subscribe to magazines or other periodicals but don’t read them (or if you can borrow a copy from someone else), cancel your subscription. The same goes for TV packages; even if you like certain shows enough that you “need” to watch them live in real-time, there’s no need to pay extra money because your favourite channel also has a streaming app/website available in case anything happens to your cable box or satellite dish.
- Shut off lights when you’re not using them. Don’t leave your computer on just so that it’s ready to use. Turn it off instead; it’ll save you money and electricity.
- As much as possible, avoid eating out or buying pre-packaged foods/meals unless they’re discounted (or free, depending on how you look at things).
Plan For Health Care Costs
If there is any important thing in retirement planning, it’s health care expenses for both early and late retirees.
You should consider health care costs in all aspects of retirement planning (including but not limited to investments) because even if you’ve set aside enough money for this purpose this doesn’t mean that the funds will go as far as you need them to!
Develop A Contingency Plan
No matter how well-planned out your retirement is there are always going to be things outside of your control that could affect whether or not it goes according to plan.
Developing contingency plans for worst-case scenarios is important so that you can minimize the damage in case something bad happens.
Get Professional Help
One thing that makes retirement planning so difficult is that it requires a lot of financial acumen. Unfortunately for most people, managing finances isn’t their strong suit; in fact, it might be something they’re actively bad at!
For this reason, it’s important to get professional help if you can afford to do so. There are lots of types of professionals who focus on finances, such as accountants and mutual fund managers (among many others), and most of them will be able to help you with retirement planning.
These are things that make the perfect retirement planning strategy: getting an IRA account, keeping a low cost of living, developing a contingency plan and getting professional help. With these, you will be able to have more savings for your future.