Planning for retirement can seem daunting, especially when complicated language like “asset allocation” and “annuities” are involved. Ignoring retirement, however, will not remove the inevitability of it occurring. Take a few steps back and review these stress-free ways to make a game plan for your retirement.
The first step to securing your financial future for retirement is to eliminate any current debt you have. This can seem like an overwhelming, intimidating task, especially if you owe a significant amount. Start by paying back any debt you may have in collections. Often, you will have the opportunity to pay off debt with a one-off payment, while you can pay off others monthly. You can also visit a credible credit repair company to assist in sorting out all of your debt for you to alleviate some of the stress.
Develop a Plan
After you resolve your debt, you can start planning for your retirement with a clean slate. If you have not done so already, you’ll want to develop a plan to save money for your retirement. Americans tend only to save about 12% of what they need to retire, so starting sooner than later will be in your best interest. Start by calculating how much you will need to support your cost of living. You can do this by estimating how much money you currently spend and create a rough estimate based on this number. You can then start saving by opening a savings account specifically for your retirement fund.
Invest in a 401(k)
If your employer offers a 401(k) benefit, considering putting a portion of your paycheck into it. Often, your employer will match your contributions up to a certain percentage to encourage your participation. Additionally, there is an added advantage: the money you deposit into the account will be before it’s taxed, which means that less of your income will be taxed.
Create an Emergency Fund
Setting up a separate savings fund for an emergency will prevent you from pulling money from your retirement fund. Often, you will be heavily taxed if you pull money from your retirement account too soon. Emergencies happen though, so try to create a fund with at least six months worth of living expenses.