You probably started thinking about retirement the day you entered the workforce. For some of us, retirement is very far off. For others, it’s right around the corner. No matter what stage of life you’re at, PA retirement income planning should always be at the top of your mind.
What if you haven’t saved enough for retirement? Or worse, what if you haven’t saved anything at all? Relax and take a deep breath. All hope isn’t lost. There are seven small changes you can make today that will help you save more money and may even help you retire sooner.
Live below your means.
You’re probably thinking: See, I knew it was too good to be true! Hear me out. I know it’s hard to live below your means in today’s world. Life is more expensive than it used to be. Smart phones, cars and other technology add up. But living below your means doesn’t mean you have to live in a shack eating hot dogs off of paper plates every night. If you take a hard look at what you’re spending your money on, you’d be surprised to see how much of it goes to waste. Two Starbucks runs a day? That’s nearly $20 a day right there. Manicure/pedicure every week? $40. Going out to eat every weekend? $50-100.
Look for ways you can cut back. Dust off your Crockpot and start making home-cooked meals (saves you time and money!). Pack a lunch instead of buying one. Cut back on the amount of clothes and shoes you buy. Brew your own coffee at home.
Just don’t forget to take the extra money you’ve saved and put it into your retirement account so you won’t be tempted to spend it elsewhere.
Slash that debt.
Pay off student loans or refinance at a better rate. Consider switching from a 30-year to a 15-year mortgage especially now while mortgage interest rates are so low. Eliminate credit card debt with the highest rate cards first. It may mean less cash in your pocket for the short-term, but paying off your debts now will pay off later when you retire.
Contrary to popular belief, not all debt is bad. The key is to consider the financial impact of paying off debt now or holding on to it a little longer. For example, car loans and credit cards usually have a higher interest rate, so you’ll want to pay those off first.
Start investing as early as possible – preferably in your 20’s. That way your money has more growth potential over time. Even if you can only put away a small amount each month, it’s still a start. If you have trouble saving, make it easy on yourself. Set up an automatic withdrawal so the money goes straight from your checking to savings/retirement account before you can blink an eye. This is an easy strategy that you can implement early in your life for a head start on your PA retirement income planning.
Contribute to a 401k.
If you’re in your 50’s and 60’s and haven’t started saving for retirement, then you’ll need to play catch-up. The first step is contributing to your employer’s 401k, especially if there is an employer match. If you’re already contributing, then increase your contributions each year. If your employer doesn’t have a 401k, open an individual retirement account on your own or with the help of a financial advisor in Bucks County.
Also look for ways to save an extra 10 percent of income. Not sure where to start? Look at your credit cards and pay off the ones with high interest rates. If you need some personalized help with your PA retirement income planning in Bucks County, call a certified financial advisor who is a Retirement Income Certified Professional.
Make your money work for you.
Check your 401k or IRA regularly to make sure you’re getting your money’s worth. Review how your money is invested and talk with your financial advisor to see if any changes need to be made.
Make sure you’re contributing the amount needed to get an employer match. 1 out of 4 people don’t take full advantage of their employer’s matching 401k contribution. If your employer starts matching your 401k at six percent, then contribute six percent or more. Anything less is just money left on the table.
Start an emergency fund. Now.
The age-old question: should I save for retirement or put the money into an emergency fund? The short answer? Both. But if you’re looking to prioritize one over the other, then start with an emergency fund. There will always be an unexpected cost you didn’t plan for – repairs to your car, new roof on your house, or the refrigerator that stopped working when the temperature hit 95. If you don’t have an emergency fund, then you’ll be tempted (or even forced) to tap into your retirement savings account.
Limit social media use.
In the age of Facebook and Twitter, we have a front-row seat to other people’s lives. This includes everything they buy. And according to a new study, social media is hurting our bank accounts.
It can be tempting to want what your friends have – a new car, surround sound system, or beach house. It also doesn’t help that Facebook loves to show you ads for the shoes you were browsing online the other day (those shoes follow you everywhere, don’t they?).
Limit your time on social media. Take a social media “fast” if you have to. Your bank account will thank you.
Need help with your PA retirement income planning? Contact me for a free consultation!
Disclaimer: All articles/blog posts are for informational purposes only, and do not constitute legal advice. If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are solely those of the author, who is not an attorney.