should begin to plan for your retirement as soon as you can. The
earlier in your life that you begin to save for your retirement,
the more time your money will have to grow. Though it is difficult,
the most important thing though is that
you get started. You can think of
a million reasons not to, but these reasons could wind up costing
you thousands of dollars in the long run. Now that you have decided
that you are ready to begin planning for your retirement there are
a few steps you will need to follow to be successful.
Goals: The first thing you will need
to do is to take a look at your retirement goals. What do you see
yourself doing when you retire? Will you travel, or will you want
to enjoy doing things around the house? No matter what you decide
to do once you retire, you will need to have a plan that will provide
you with income for many years. There are several online
calculators available to help you determine how much money you
will need to save for your retirement.
Up a Budget: Next you will want to set up a budget for
yourself. A budget will help you to better manage your money and
will allow you to make sure that you "pay yourself first."
This way you can make a payment to your retirement plan (even if
it's only a few dollars) as if you were paying any other bill.
Out for "Budget Busters:" Sometimes
a budget can hit a brick wall because of frivolous spending. Be
sure to review your budget often and make adjustments where you
need to. And when making cuts, be sure to ask yourself if something
is really a luxury or a necessity, and be honest!
Pension Plan: If your employer offers
a pension plan by all means participate. Because employers often
match a portion of their employees' contributions, this is a great
way to save for your retirement. You should try to contribute the
maximum but if you can't even small contributions add up, especially
over the long term. Another great advantage is that because these
contributions are automatically deducted from your earnings, it
is easier to save because it is money that you have never seen and
will not be tempted to spend.
Term Investment Options vs. Long Term Investment Options: The
length of time before you will need your money will be an important
factor in determining your investment strategy. The later in life
that you start investing in your retirement the more critical your
choices will be. Whereas if you begin early, you have time to try
different strategies. Short term investments would
include savings accounts, money market funds, and certificates of
deposit. These types of accounts are generally less of a risk and
because of this they usually pay a lower percentage of interest.
Long term investments include stocks, bonds, and
mutual funds. If you will not need your money for awhile, you may
want to consider investing in these types of accounts. Also, because
of the larger risk involved in these investments, the potential
return on your investment is greater.
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