Saving for retirement may seem like an impossible task, or something that you don’t need to worry about until you “get older”. If you don’t start saving now, you won’t have anything to live on when you do retire.
Not all companies offer retirement plans for their employees and investing in the stock market can be tricky due to constant fluctuations in the economy. What might be a goldmine today could be an empty hole in the ground tomorrow. Here are some tips to help you avoid outliving your retirement funds:
- Better late than never. Start saving now, and a great way to do this is by opening an IRA account at a mutual fund company before the tax deadline. The money you contribute to that fund will count toward the current tax year, giving you a head start on your retirement nest egg.
- Opt for pension plans. If your company offers pension plans that have a periodic payout guaranteed by an insurer even if the company goes out of business, opt in for it and don’t select the lump-sum payout option (there are far less protections for those types of payouts).
- Choose an annuity. It allows you give a chunk of your retirement savings to an insurance company, who will then provide you guaranteed payments every month for the rest of your life.
- Pay off your mortgage. Mortgage payments are usually the biggest expenses we incur, and ridding yourself of that payment allows you more flexibility with your money.
- Invest wisely. When selecting options for investing, don’t look for the skyrocketing profits of a potential flash in the pan – choose something that has a consistently steady track record. Rapid gains often precede rapid losses, so avoid potential ‘fads’ in the stock market.
- Manage your savings withdrawals prudently. Experts recommend that you not withdraw more than 4% of your savings annually, to ensure optimal preparation for the future.
- Work longer. If you work past traditional retirement age, you still have an active income that you can save part of for your retirement.
Don’t outlive your retirement funds! Plan wisely and invest smartly to ensure you have what you need in the future.