4 Tips To Help You Afford Retirement
There was a time when retirement was referred to as the ‘golden years.’ But that was then, this is now – and retirement’s reputation as a time of leisure, laughter, and lounging all day long has been seriously tarnished.
According to the Center for Retirement Research at Boston College, their National Retirement Risk Index reveals that about 55% of U.S. households might not be able to maintain their standard of living once they’ve decided to stop working.
But there are some steps you can take to try and make sure your retirement is less about stress and more about happiness. Here are four practical suggestions that could help shore up your financial plans when a regular paycheck is no longer part of your life.
A Budget For Those Who Usually Who Don’t Like To Budget
It’s simple, understandable, and easily doable. The 50/30/20 budgeting method can help you monitor your spending and keep it in check without the need for major lifestyle changes or complicated spreadsheets.
Here’s a breakdown of how it works:
• Take your total after-tax income each month, divide it in half, and consider that your essentials budget (50%) for items such as groceries, utilities, medications, minimum debt payments, and any other ‘essential’ spending.
• Take the remainder of your income and divide it into personal spending (30%) and financial goals (20%).
Personal spending can include nonessentials and extraneous fun things such as takeout from your favorite restaurant, streaming services, cultural activities, and the like. Financial goal spending can include investments, additional debt-reduction payments, and retirement savings.
Eliminate Credit Card Debt
Credit card debt is the most expensive kind of debt, owing to the sky-high interest rates that credit card companies usually charge. The more you lower this type of debt, the more money you’ll have available to add to your retirement savings.
A free website called AmOne can help you reduce your credit card debt faster, potentially saving you thousands of dollars in interest. AmOne will match you with a low-interest loan to pay off all your credit cards – all at once. Loan interest rates can start as low as 3.99%, which most likely is significantly lower than the rate imposed by your credit card company. Your information is kept confidential and secure, which is one of the reasons AmOne has received an A+ rating from the Better Business Bureau. The application process takes just minutes to complete, and you could qualify for a loan of up to $50,000.
The Time To Invest Is Before You Retire
If you don’t have access to a 401(k) plan through your employer, consider opening an individual retirement account (IRA). This type of account isn’t attached to your employer, and it stays with you regardless of where you work or live. The investment decisions are yours to make: You decide the amount you’d like to contribute, and which investment options you prefer. And you can get started with an IRA for as little as $1.
Micro-investing apps like Stash let you choose from hundreds of funds and stocks, allowing you to build your own investment portfolio. With Stash, you can also invest in fractions of shares, which means you can select funds you might otherwise not be able to afford.
Make The Most Of Your 401(k)
An employer-offered 401(k) plan reduces your taxable income; in addition, your employer’s 401(k) match is basically the equivalent of a raise. To make the most of a 401(k), you should contribute enough to receive your employer’s full match.
Because this type of plan is based on compound interest, a 401(k) can increase a great deal over time. For example, if at the age of 21 you start investing $25 a week ($1,300 a year), a typical return of 7% could result in you enjoying more than $25,000 a year in retirement. Even better: If your employer matches your investment, you would only need to contribute $12.50 a week. Not bad for an investment that’s an example of exceptionally good financial thinking.