How often do you think about retirement? If you are anything like me, you think about the future quite a lot to ensure a long, stress free life. If, however, you are like most of the U.S., then you are probably saving something for the future, but it is very little in comparison to your current earnings. And also, if you are like the majority, you have no idea if what you're saving will even be enough once you retire!
Don't feel bad about this. The important thing is that you learn what is necessary in order to retire wealthy and without worry. Follow these tips and you shouldn't need to worry about the future any longer.
Let's just get right into it!
1) Start Early
If you haven't started investing for your retirement yet, then I suggest that you get started immediately! Whether you are extremely young or old, the best time to start investing is right now. “So what is the big deal about investing early anyway?” you might ask. The major answer: compound interest. While 10% interest might not sound like a lot, it can really add up over the years. 10% of $10,000 is $1,000, which means that over the course of 1 year, your investment has increased by $1,000. “Big deal,” you might think. But if you do nothing at all with this investment and just let the interest build, guess how much that 10% interest will yield in its 40th year? $41,000! And your entire investment will be worth over $450,000! Compound interest is an amazing thing, especially if you discover it's power first hand ;).
2) Stay Consistent
There are many people that do invest in their 401(k) fund through their work, which is great, but then they decide to borrow from it for a down-payment on a house or an exciting vacation. This is NOT a good idea. Instead of borrowing from your retirement fund, you should be putting money into it consistently, especially if the market is going down. By continually shoving money into your investment fund, you will be able to buy more shares of the same funds, which, when it goes back up, you will have much more money than you had originally! Set up your direct deposit to fund your retirement account every time you get paid. This way you can be certain that you will stay consistent and have a whack-load of money waiting for you when you retire.
3) Take Advantage of 401(k) Matches
While I encourage everyone to invest money into their 401(k), if your company provides a match on your investment, then you should DEFINITELY invest in your 401(k) account. By investing a mere 3% into my 401(k) fund, with my company's help this will immediately turn into 6%! This is pretty much a no-brainer. You know that you should invest for your retirement and your company is willing to give you free money if you do. I encourage you to invest at least the amount that will be matched. And, if your company does not match your investments, then I still encourage you to invest! Sure, it stinks that you don't get a match, but you still need money when you can no longer work, right? Right. So start saving some money!
4) Create Other Revenue Sources
When I ask people about their retirement plans, they typically talk about a few options: a 401(k), a Roth IRA, or a 403(b), but did you know that there are so many more options out there? And, they can pay you money each month without taking away from the overall amount of the fund! I'm not talking about mutual funds or investment funds. Nope, I'm talking about businesses. Anyone has the power to start a business today, and it doesn't even have to cost that much. You could invest some money in creating an online store, a blog, a web app, or even a snow plow business (which would be quite profitable in my area right about now). Instead of planning to survive on a lump of cash, why not think a little differently about your retirement and begin earning some extra revenue that will last your lifetime! For me, I will soon be investing in real estate. The property values will likely keep up with inflation and I will earn a consistent cash flow! Sounds like a great retirement plan to me.
Do you plan to retire wealthy? What is your plan?