How To Save Money For Retirement You Ask?
If you are interested in learning how to save money for retirement you must be keenly aware of the value of time and money. If you are asking the question you must have the interest to improve your current financial situation. There are many ways to approach the topic of how to save money. Let’s get started.
#1 – Make Saving A Habit
If you are already saving money you then understand that you needed to develop the habit of saving otherwise you would have just spent your money as you earned it. You are on your way, keep that financial habit going.
If you are not saving yet, get started. Many people make the mistake of assuming that if they cannot invest large amounts of money it’s not worth it. That assumption is a huge financial mistake made by many. You can start saving in small amounts, it all adds up. The key is to just get started.
#2 – Take Advantage Of Time
Take advantage of the time value of money. The earlier you start saving money for your retirement the more time it has to grow. Your money compounds all by itself but needs your help to get started. Before your money can compound you have to invest it.
To maximize the value of compounding start investing for retirement when you get your first job. Invest small amounts at first and then as you progress throughout your career and earn more money increase your contribution amounts.
#3 – Set Your Priorities
Make saving money for your retirement a financial priority. Only you will save money for your retirement. Oh sure your employer may match your contribution amounts but they only match what you put in. So it starts with you.
Turn all of your raises, bonuses and tax refunds into retirement investment money. Your standard of living was fine before that extra money arrived so just continue that same standard of living and invest the extra money.
Keep your credit card balances to a zero balance. Pay the balances off each month to avoid paying credit card interest. Invest the money you would have paid in interest to the credit card companies.
#4 – Take Advantage
If your employer offers a retirement plan take full advantage of it. Invest the maximum amount allowed, the IRS changes that maximum every year. You can’t lose with an employer sponsored retirement plan. Your plan contributions are tax-deductible plus tax deferred until retirement. What a deal.
#5 – Start Your Own
If your employer does not offer a retirement plan you can start your own Individual Retirement Account (IRA). The ability to tax deduct and tax defer the contributions you make to that account will depend upon which type of IRA you chose.
If you invest in a Roth IRA your contributions are not tax-deductible but your money is tax deferred. With a traditional IRA your contributions are tax-deductible and tax deferred.
#6 – Hands Off
Do not touch the money you invested into your retirement plans. If you do you will incur taxation as well as tax penalties; which means that you essentially throw your money out the window.
You developed a desire to learn how to save money so why would you penalize your own financial future by dipping into tax deferred money? The IRS rarely gives investors a tax break but they make and exception with money invested in retirement accounts, don’t blow it.