Saving For Retirement in 2021
If you are on the younger side, you can feel like it is so far away, but the biggest problem is time. Time is the most crucial variable in your ability to meet your retirement goals. If you are reading this right now do not forget that you need to start right now no matter what happens. Most people and financer suggest that you should be saving roughly 10 to 15% of your pre-taxed income.
If that percentage is not suitable for you right now it is totally normal. You can easily set saving goals and reach them one by one. It will create consistency for you, and this is the key for saving. When you get paid, take your calculator, do your calculations, and move that small amount of money which you planned into that fund. If it is hard for you of course you do not have to save your 15 percentage of pre-taxed income. You can take the percentage according to your expenses.
Investing is one of the best ways to compound interest and compounding interest is essential. It creates exponential growth. I am going to explain this with an example. If you have $10,000 in your retirement account and that account is averaging 10% return of interest every year, in the second you will have $11,000. Thanks to that, every year your money will increase just while you are sitting.
How Much Should People Save?
If you plan to retire at age 65 you must keep in mind that women live on average up to 95 years old. Therefore, that would be 30 years’ worth of retirement which you need to save up. Financial advisors Recommendation is %10 of your income should be set aside for retirement. However, you can work your way up to 15% because if you do this it would be more ideal. The key for retirement is to be sure that you are prepared for everything and every unexpected situation. It will be important for you to relax and have a rest in your 90’s.
You must think about which expenses you will have while you are in retirement. Number one cost is housing as always. Whether you are paying a mortgage or paying rent, there would be obligation no matter where you live. You must think about food too. Do not think about right now, think about the future. You will need to eat healthy and good when you get old. Therefore, food and transportation are the costs that you will always have.
When it comes to the biggest deal, it is health insurance. You will want to keep up your health as much as you can. You will have to go to your doctor’s appointments periodically. These are the certain costs that most people have. Saving up this amount like %10-%15 of your income is a good idea for your retirement but as I already said, you do not have to start with this amount. You can start saving less and you can increase the amount slowly according to your income and expenses while you are young.
Talk To a Financial Advisor
Setting up a meeting with a financial advisor and spending just one hour with him/her could change your entire retirement plans and your future. You can ask all the questions which you want to ask. You can get best recommendations from a financial advisor about your financial life and retirement. If you show them all tour finances and lay back. They will give you real recommendations. They will also give you an idea about what your goals should be. You can learn so many things from reading blogs about retirement or watching videos but do not forget that everybody’s situation are different. An expert can give you the best ideas about your financial life.