While growing up, many of us were surrounded by our dads who knew how to spend their money to live a lavish lifestyle. However, most American dads never had any great retirement planning advice to give to their kids. Apart from buying a house, there was not much in the way of investment planning. Times have changed, though, and so have the means of smart retirement planning advice. Here are some pearls of wisdom for your retirement life.
Dream big, plan small and start today
If you’re wondering what the right age is to start planning for retirement, it is today. Studies have shown that an individual contributing $75 monthly to his/her retirement fund at the age of 25 would go on to accumulate more assets at the age of 65 than the person who is contributing $100 and started at the age of 35. The retirement planning advice? Irrespective of your age, the best day to start for retirement savings is today.
Contribute to your 401(k)
Considering that your contribution towards 401(k) retirement savings fund is exempt from tax, it is a vital piece of retirement planning advice that you should heed. Your withdrawals are subjected to taxes based on when you withdraw. If you do it after retirement, then the tax rate will be markedly lower than the rate at present. Plus, if you change your employer, you can rollover your 401(k) account to the new employer.
Cash in on catch-up contribution once you have crossed 50
Sometimes it’s easy to loathe the fact you started saving for retirement late. However, the option of catch-up contribution can help you swell your retirement savings significantly to make up for lost time. Hence, in addition to regular contributions, you can make extra contributions to ensure that your retirement life doesn’t suffer due to the mistakes of your past.
Automate your savings
Contribute to the retirement funds first and take care of your expenses later.