It feels like it’s ages away. Some days you can’t wait to get there and other days you find yourself realizing it’s closer than you think. For most of us, retirement is our end goal. We work and work away, knowing that one day, we won’t have to anymore. But no work also means no income. That’s why it’s important to start thinking about retirement as early as possible.
No matter what phase of life you’re in, you can start building your retirement fund. We’ve put together a few tips to help you get started.
Establish Your Goal
It’s hard to save money if you’re not sure how much you want to save. To successfully build a retirement fund, you’ll need to sit down and write out your goals. Calculate how much you want to have saved for retirement and figure out where your current savings and income lie in comparison. Knowing how much you need to save will allow you to set smaller savings goals along the way, such as saving x amount each month. A common rule of thumb is saving 15% of your monthly income for retirement.
Utilize Your 401(k)
If you’re eligible for a traditional 401(k) plan through your employer, take advantage of it. This is one of the easiest ways to start adding money to your retirement fund. Traditional 401(k)s allow you to contribute a certain percentage of your paycheck into your account before taxes are deducted from your wage. The taxed income you receive will already have your 401(k) contribution deducted. Most employers will also match the amount you contribute to the account. For example, if you contribute 5% of a $60,000 salary ($3,000), your employer will also contribute $3,000. The rules for this may vary from one company to another, so it’s important to ask your employer about its normal contributions. To learn more about the 401(k), click here.
Invest Your Money
Stocks, bonds, mutual funds, properties . . . the list goes on and on. You’ll have plenty of opportunities to invest your money over the years, some at higher or lower levels of risk and return than others. The good news: you get to choose the type of investment you’re most comfortable with. Investments can be risky, but worth it if they’ll earn you even more money, and you’ll be able to contribute the extra to your retirement fund. If you don’t know where to start, consider speaking with an investment professional to help you make a well-educated decision.
Evaluate Your Budget
Do you have room to cut some expenses? Think about your monthly subscriptions – which ones do you use and which ones could you lose? Maybe it’s time for you to downsize your home or move to a cheaper apartment. Take some time to brainstorm the ways you could trim your monthly budget. Instead of spending the money you have left over, allocate the savings to your retirement fund. The benefit of saving this way is that you’re used to spending this amount of money, so you shouldn’t have any added financial strain. Your overall monthly budget will stay the same – but your future self will thank you.
Incorporate Your Passions
Work doesn’t always have to feel like work. If you have a special talent or creative passion, there’s a chance you could make some money at it! Some small towns have locally-owned businesses that allow artists and other creatives to sell what they create. Talented musicians can often make an extra buck by performing at events and accompanying other performers. A lot of sole proprietors have been able to build lucrative businesses by honing in on their skills and passions. Even if you don’t feel like you’re the most creative, there are plenty of ways to make an extra buck! Sign up to drive for rideshare or food delivery, babysit on your days off, or pick up a second part-time job if you’re needing some extra cash. You can put the extra money you make in your retirement fund without sacrificing your full-time income.
Saving money now is essential to securing a great future for yourself when your working days are over. If you take some of these ideas and stick to your plan, you’ll be able to watch your retirement fund grow over time. Use these tips to get started today!
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