Focus in on your 401k: 4 Retirement planning tips for today
Retirement is a time in your life to spend time with loved ones, enjoy hobbies and traveling, and live stress-free. That isn't always how it works out, though. The ability—or inability— to retire with financial security is a real concern that looms over the heads of many people. However, with some simple planning, you can be sure to enjoy the golden years of your life without worry.
Limit Extra Expenses
While you may think of large purchases getting as in the way of your retirement, little purchases can hurt too. Expenses that cost under ten dollars are often ignored as inconsequential, but they build up and can hamper your retirement goals. Daily coffee runs, eating out for lunch, leaving the lights on and data charges on your cell phone are little charges that add up quickly.
Keep a detailed journal to see where all of your money goes. You'll be surprised by how much you waste at the end of each month. Set a limit on how much extra money you can spend, and stick to it.
Contribute to your 401k
Take full advantage of the 401k option your employer offers. Enroll in your company's 401k program and meet your employer's match. You can also get advice from a 401k advisor to ensure you're making the most out of this benefit.
It's also wise to increase your contribution by one to two percent each year. If you start early, the amount you contribute to your retirement will hardly be noticeable on each paycheck.
Plan your Living Situation
Hopefully, by retirement age, your home is paid off or within striking distance. A hefty mortgage can be difficult to pay with your retirement income. If you're going to be empty-nesters, it may not make sense to keep that huge home. You and your partner should decide if downsizing is a better option.
The equity from your home can be used to pay for a significant portion or all of your new living quarters. Renting is also an option if you can find an affordable community. A lot of retirees move to states such as Florida or Texas because they have no state income tax.
Set up your monthly contributions to your 401k and other retirement funds as automatic deductions from your bank account. Although you may feel the sting of these funds being withdrawn, the investment is well worth it. These monthly "bills" will pay for themselves many times over when you are ready to retire.
Retirement may be far in your future, but the earlier you start saving and investing, the more secure you will be. Even if you've had little financial awareness, it is never too late to start saving for retirement.