Retirement can be an overwhelming and easily ignored concept in your daily and professional life. Instead of avoiding the topic, it’s important to get educated about retirement. Your older boss or already retired parents may not seem like the best source for modern saving methods, but sometimes you don’t need to re-invent the wheel.
Check out our list of old retirement ideas that are still good tips for modern savers.
1. The 70% Rule
One rule of thumb that has long been held as fact is that you will need 70% of your pre-retirement annual income in retirement. The actual percentage you will need will likely be a bit higher or lower because everyone starts with different financial situations and has different plans for their retirement years. Whether you plan to go on expensive travels or downsize and be more of a homebody, your specific needs will be unique. Still, as you begin thinking about and saving for retirement, this can be a goal to work toward. Then as you get closer to retirement and adjust your plans, you can also adjust your goals.
2. Aim for a Million
Another good goal to work toward is to save $1 million. Again, how much you will need will depend on your current lifestyle, plans for retirement and how much money you make. Some will need to save a lot more than $1 million, while others require much less to live happily and comfortably. A million is a good beginning number to aim for in the early stages of your career. You can always grow your savings from there.
3. Start Early
This is certainly an oldie but a goodie: start saving for retirement early. This is because the earlier you start saving, the less money you will actually have to save. By investing money early, you allow that money to earn interest, and the interest on that money to earn interest. It’s known as compound interest.
4. Get Help From Your Employer
In the past many employers offered pensions, then matching contributions for 401(k) accounts and now … well some employers don’t seem to be offering anything. But don’t assume that’s true! Find out if your employer offers matching contributions for your 401(k) and if so, make use of it. This is essentially free money and effectively increases your income without increasing your tax bill (until you withdraw funds in retirement).
If your company does not provide a sponsored retirement program, look into directly depositing some of your paycheck into an individual retirement account. Although it may seem that there are fewer and fewer employer-sponsored avenues to save for retirement, you should check out your options.
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