While you may be young, or financially unstable, or even without a mortgage, it's important to immediately begin preparing for retirement. The truth of the matter is the earlier you begin preparing for retirement the more money you'll have. This isn't true simply because you'll be able to put a higher amount of funds in your retirement fund, but with elements such as compound interest, this nest-egg will blossom. When you're trying to establish a healthy retirement fund, these four tips will help enhance the efficiency of your savings.
Tip #1: Immediately Begin Contributing to Your 401(k)
The importance of a 401(k) is nothing new, and many employers offer this type of retirement plan. In a nutshell, a 401(k) allows you to deposit pre-tax earnings directly into this account. Therefore, you're able to add a higher percentage of money into this savings account without taking a major hit directly to your take-home amount. For example, if you wish to put $100 in your 401(k) per paycheck, you'll only see a reduction of $85 in your take-home pay.
Tip #2: Employer Matched 401(k)
In some instances, a 401(k) is matched by your employer. When this is the case, you must add a set amount of funds into this account in order to gain the most benefits from the employer match. For illustration purposes, let's say that your employer offers a 50% match if you agree to deposit 5% of your salary into this account. Since your salary is $50,000 per year, you'd have to contribute $2,500 into the 401(k) account, which requires your employer to deposit $1,250 into this account. Essentially, this form of retirement plan actually gives you free money. Always meet the maximum of an employer-matched 401(k) benefit to gain the most out of this incentive plan.
Tip #3: Create a Savings-Centric Plan
While there are many plans and programs designed to enhance your retirement plan, the most effective way to build a healthy retirement fund is to simply start saving. Create a budget that allows you to put at least 10 to 15-percent of your take-home pay into a savings account. The type of savings account you choose to use can dramatically vary; however, always use one that offers annual interest payments on available funds. This essentially means you're being paid to save your money, not a terrible deal, right?
Above all else, make saving for your retirement plan a priority, even before getting approved for a mortgage and purchasing a home (Your650Score). While you may feel you have decades before you wish to retire, the sooner you start the greater your quality of life will be in the coveted twilight years.
Tip #1: Immediately Begin Contributing to Your 401(k)
The importance of a 401(k) is nothing new, and many employers offer this type of retirement plan. In a nutshell, a 401(k) allows you to deposit pre-tax earnings directly into this account. Therefore, you're able to add a higher percentage of money into this savings account without taking a major hit directly to your take-home amount. For example, if you wish to put $100 in your 401(k) per paycheck, you'll only see a reduction of $85 in your take-home pay.
Tip #2: Employer Matched 401(k)
In some instances, a 401(k) is matched by your employer. When this is the case, you must add a set amount of funds into this account in order to gain the most benefits from the employer match. For illustration purposes, let's say that your employer offers a 50% match if you agree to deposit 5% of your salary into this account. Since your salary is $50,000 per year, you'd have to contribute $2,500 into the 401(k) account, which requires your employer to deposit $1,250 into this account. Essentially, this form of retirement plan actually gives you free money. Always meet the maximum of an employer-matched 401(k) benefit to gain the most out of this incentive plan.
Tip #3: Create a Savings-Centric Plan
While there are many plans and programs designed to enhance your retirement plan, the most effective way to build a healthy retirement fund is to simply start saving. Create a budget that allows you to put at least 10 to 15-percent of your take-home pay into a savings account. The type of savings account you choose to use can dramatically vary; however, always use one that offers annual interest payments on available funds. This essentially means you're being paid to save your money, not a terrible deal, right?
Above all else, make saving for your retirement plan a priority, even before getting approved for a mortgage and purchasing a home (Your650Score). While you may feel you have decades before you wish to retire, the sooner you start the greater your quality of life will be in the coveted twilight years.