Where will you be in five, twenty, forty, or fifty years? No matter your age, you need to think about your future.
In your twenties, when someone says you will need a few million dollars in the bank to retire, saving that much money seems like a formidable feat. For entirely different reasons, it is also a challenge for the fifty-year-old procrastinator who didn’t start retirement planning until he was forty-eight.
Believe it or not, it doesn’t and shouldn’t be that complicated. So how do you make saving for retirement a simple no-brainer? If you already have an emergency fund with three to six months of income in it and you have a steady income, you should look at contributing to your retirement plan if you haven’t already done so. If you are just starting your working years, the compound effect of saving for your retirement early on will put you in a great position when it’s time to retire. And if you are a retirement procrastinator, there is no time like the present to get started.
There are some great tips on how you can make the process easy from some of the best retirement advisors in the Salt Lake City area.
Make the Deduction Automatic
The easiest way to make sure you are consistent about saving for retirement is to have the savings automatically withdrawn from your paycheck. If you work for a company that offers a 401K or 403B plan, automatic withdrawal is likely one of your benefits. Most 401K providers allow you to select either a fixed dollar amount or a percentage of your gross earnings every pay period to be placed into a retirement account.
There’s another benefit: these are qualified plans funded with pretax dollars, which lowers your taxable income.
If you do not work for an employer that offers a retirement plan, or if you are self-employed or a small business owner with employees, there are other options available. You can set up a Traditional IRA, Simple IRA, or SEP IRA. A TrueNorth retirement planner can help you find the plan that is best for you.
Automate the Increase Annually
One of the keys to any kind of savings, debt reduction, or investment plan is to increase it gradually over time. In the case of retirement planning, it helps ensure that you are increasing what you put away for retirement. Remembering to increase your percentage every year can be difficult, so to help you reach your goals, many retirement plans have an option to build the increase for you.
When you increase the percentage going to your retirement account by 1 percent a year, you often barely notice the adjustment. Over time, you will see growth in what you are contributing as well as in your account balance. As part of an annual retirement review, a TrueNorth retirement specialist can help make sure you are on target with your goals.
Take Advantage of Free Money
Why turn down free money? Many employers offer a match to their 401K or 403B plan. That is guaranteed money just for you. The funds literally have your name on them. Even if you do not end up working for your employer for the entire vesting period, you may still get a portion of the extra money. It is free. It is part of your benefits package, and it would be foolish not to take it. If your employer offers a retirement match, max it out!
Create a Financial Blueprint
There are several factors that go into picking a retirement vehicle to help you save. You need a plan that is custom-tailored to your retirement goals. At TrueNorth, we know each investor has a different set of priorities. We want to make sure your retirement plan is sustainable and satisfactory and that you can afford to stay retired. Watch this short video to see a little more about what we can do to help you create a financial blueprint for your retirement.
To schedule a no-cost retirement planning consultation tailored to your personal financial goals, contact the fee-only financial planners at TrueNorth Wealth, one of Salt Lake City’s leading wealth management firms, for a no-cost consultation at 801-316-8175.