When you want to save for retirement, but you have no idea what you are doing, you are going to need all the help you can get. There is nothing more boring that talking about compound interest and how to fill out your 401k, but it is a necessary conversation if you want to be happy and healthy in your retirement.
The 401k is the ultimate retirement plan, if you are in a job that offers one. You can set your contributions so you do not have to think about it, you can take control of the investments after you are vested for a certain amount of time and you can get the tax benefits of investing pre-tax dollars.
But you need to know how to take advantage of all of the benefits of saving for retirement. Read on for tips on how to do just that.
Follow the 1% Rule
When you increase your contribution by 1% each year, you start to build a serious base for growth in your 401k. It is a great way to bring your contribution up without heavily impacting your budget from month to month.
Claim The Match
If your workplace offers a 401k match, you have to take it. If you don’t that is like turning down free money. The amount that you can bank in compound interest is staggering if you do the math and look at it over years and years of saving for retirement. Claiming the match is a no-brainer move that anyone with an interest in being solvent in retirement needs to jump on right now.
Think About a Health Savings Account
Health savings accounts can be a great retirement account, if you know how to take advantage of them. They are not just for paying health care expenses. Not only can you deduct 100% of the expenses from your taxes, and money that is not used for medical expenses can be reinvested and grow over time. Employers can contribute funds as well. Then you can have those funds in retirement to play for health care expenses.
Embrace Getting Older
When you get past the age of 50, you can contribute more to your retirement funds, That means that you can start pumping more into your 401k or IRA in order to supercharge your retirement savings.
Look for Other Ways to Make Money
Saving for retirement doesn’t just mean stuffing your 401k or IRA. You can start to learn new skills that bring in extra money and allow you to make some decent scratch on the side. For instance, you can learn how to day trade and get even more out of the stock market. When you invest in a day trading education, you can get better at spotting trends in the stock market and able to jump on opportunities that will give you the chance to profit.
No matter what path you choose, you want to make your retirement a nice, solid time to exist. Your career might be fun and fulfilling, but the freedom of retirement is there for you to really explore what you love.