No matter what your age is, having a budget and planning for Retirement should always be a priority. When you’re young, it can be easy to ignore the importance of living within your means and plan for a successful retirement. Often times opportunities such as jet setting off to Europe take priority over saving and investing. However, putting off retirement may result in a less than ideal financial situation when you retire or working well into your 70s. These are just few of the reasons why you should start saving and preparing for retirement today.
Create a Budget
The first and most important step in securing your retirement is to create a budget. You can’t start saving and investing responsibly if you don’t know what you’re working with. Input your monthly expenses into a spread sheet and divide any annual expenses by 12 so that you can easily include them as well. Your spread sheet should you include your bills, food, and gas in addition to your extracurricular expenses.
Once you have your finances mapped out, look at the areas in which you can cut back on spending and start saving. Keep in mind, failing to stick to your budget will only will make it obsolete and jeopardize your financial future. One way to keep yourself from straying off course is to set a little extra money aside every month for impulse buys.
Depending on the state that you file in, the IRS can take almost 25% of your income as a single filer. In order to prevent Uncle Sam from reaching too deep into your pockets, you need to use every tax credit you qualify for. Mortgages and children are just a few examples of credits that you may qualify on your taxes.
If you’re delinquent on your taxes, it’s important to pay the IRS what they’re owed before they freeze your accounts and seize your assets. Tax resolution firm Community Tax has a team of experts who can assist you with IRS tax debt and help you discover the best ways to save before you file.
Hire a Financial Advisor
There are so many different kinds of retirement accounts and ways to invest your money, it could make your head spin. If you feel overwhelmed by the number of choices, a financial advisor will help you decide which one(s) you should use. As a general rule of thumb, if your company offers you a matched 401(k) plan, there are few instances where you should invest in anything else before you hit your limit. However, there many lucrative ways to combine multiple savings accounts to maximize your returns. One of the traps that a financial advisor can save you from is solely investing in your company’s retirement plan.
It doesn’t take a genius to figure out that the more money you invest the higher your return is. If you’re married and you feel confident in your union, put your into a joint retirement account with your significant other. A joint retirement account will produce exponentially more returns than two separate ones, but it does come with more complex regulations at the time it’s dispersed.
Pre Retirement Preparation
The Pre Retirement Preparation is the decade or so right before the typical age of retirement, or in other words, the home stretch. You’re still working, but retirement is just around the corner, and you’re starting to get a clear vision of your nest egg. It’s during this time that you should asses just what kind of life you want to live as a retiree.
Do I want to stay where I am? How often will I travel? What will I need to be content? These are all questions you should ask yourself around this time. By now, you have a fairly accurate idea of how much money your retirement accounts are going to provide. Try to determine the monthly income you need and assess whether or not you can afford to retire early.
Don’t wait to start budgeting, saving, and planning for retirement; if you aren’t careful, you could end up working well into your 80s.