Sage tip # 2 – It is never too late to start planning for your retirement. Don’t think that since you have not started a plan, that what you are able to save between now and retirement is not going to matter. We have all at one time or another said, “I will start tomorrow”. Whether it was to start a diet, quit smoking or save money. No matter when you start, IT MATTERS! The problem that most people have is that they keep putting things off. They don’t have a plan for the future. They only think of “today”, but the fact remains that at some point, you will have to pay. If you don’t start saving until mid-life, you will have to work longer to catch up, and will have to work many more years than anticipated. If you don’t save at all, you will always need to work.
If you have put yourself in this position, stop and realize that it is not too late.
You might be faced with many more concerns than merely retirement issues.
Are you dealing with the questions such as: How can I afford to buy a house? How am I going to afford to have children? How am I going to pay for college? If you are like most people, these questions continue to circulate in the loop of your life. Eventually, you are faced with the question of Retirement.
It all starts with a well planned budget and the knowledge of just how the various savings options can help.
Begin by asking your employer what retirement benefits are offered. A 401(k) plan is a powerful tool. Most employers that offer a 401(k) will match your contributions up to a certain percentage. This is “free money” that you can take advantage of for your retirement. If an employer is willing to match 3% then you must find a way to give up 3% of your earnings to fund your 401(k) because now you are putting away 6% a year and hopefully with any market appreciation this money will grow. You must ask yourself, what am I spending money on that I can afford to give up so that I can fund my 401(k).
This is where a well-planned budget can help. Look at your expenses; phone bill, cable bill, gym memberships, utilities, car insurance, homeowners insurance, car payments and even your grocery bills to find out where to save.
If you analyze your expenses and are able to save a few dollars by cutting services that you are not using, adjusting your deductibles or changing where you buy your groceries, it is likely that you may find a couple of hundred dollars of savings a month. You can maximize these savings by contributing to a 401(k) and take advantage of any matching of the company contribution. If you do not have access to a 401(k) simply putting this savings in a tax-deferred retirement account is a plus.
Any savings obtained by these subtle changes can be applied to help answer the questions that lie in front of you. The questions of a house, children and college may not be entirely answered by these potential savings, a well-constructed budget that is reviewed, managed and adjusted can be the key to starting your plan for retirement.
Image credit: Duncan~