You work so hard for all of your life with a hope of a comfy retirement. But, unless you have planned something to retire rich, retirement can be all your nightmares coming to life. Your income would be lower than ever and expenses will be soaring to the skies.
If you still haven’t given a thought to saving for retirement, we are here with some tips to retire rich. Here you go:
Calculate the amount that you may need
You should know an approximate figure that you may require during the sunset years. Don’t forget to consider the inflation and health fund that you may require at that time. After considering all the factors, calculate an estimated amount that you may require per month and then per year. These digits will help you get a clear idea about how much you need to save or invest from your current income. You cannot reach a particular stage, unless you set a specific goal that you need to reach.
Start saving as early as possible
Most of us don’t even bother to think about saving for retirement until we are in our late thirties. Until then we are just spending all of our income (or even more than that) in making our lives more and more lavish. When you are 40, retirement strikes your mind and you panic. Yeah, sure you have 20 years to save, but you could have saved a lot more if you started in your late twenties. And thanks to compound interest, you can get a lot more money if you start saving early.
You Might Also Like: How to overcome the emerging Retirement Readiness Crisis in United States
If you start late, make up for the lost time
If you are turning 53 next month, and haven’t yet started saving for retirement, don’t panic. You can do it now, but you would require to save a lot more than you were supposed to do 20 years ago. The bright side is, the government is allowing people who are 50 or older to make catch-up contributions to their retirement funds. IRA catch-up contributions are $1,000 for a total allowable contribution of $6,500 each year.
Take advantage of 401(k)
Would you like some free money? Of course! Your employer is providing you free money in the form of 401 (k), but the only thing that might bother you is that you too need to contribute to get some extra money. So, if your employer is offering such golden opportunity in form of a 401 (k) match, make sure that you take full advantage of it.
You might think that investing in bonds will be risk-free and that is the way to never lose money. But this approach will not provide you an opportunity to retire rich. You need to take a little risk and invest in stocks and real estate. You may think that there are possibilities of market crashing or housing bubble bursting, but in the long run, this is where the money will come from.