3/20/2012 12:57 PM ET|
Maximize your retirement income
It's hard to think of retirement when you're still young, but smart moves now can make sure your older self will be financially secure.
You want to not only have enough money to live comfortably when you retire, you also want a little bit more. Maybe you want enough to travel, start that side business you always talked about or purchase your dream home since you'll have time to enjoy it. Whatever your retirement dreams are, maximizing your retirement income can help.
Here are some ways to do just that:
Start saving as soon as possible
You've no doubt heard of the benefits of compound interest. The key is that the sooner you start saving, the sooner you start gaining the interest and the sooner that interest can start compounding. Two years makes a difference, but five or 10 years makes an even bigger difference in the amount you end up with upon retirement. If you're on a tight budget, you can still stash at least a little bit away in a retirement account. Have a set amount automatically deducted from your paycheck, so you're not tempted to spend it. You're investing in your own future. (Are you saving enough for retirement? Find out with MSN Money's calculator.)
Start saving with a lump sum
This one isn't always possible, but if you happen to have a nice lump sum of money come into your possession, consider using it as the base of your retirement fund. Graduations and weddings often result in gifts of cash, so use these as the seed of your retirement account for increased compound interest and a larger return when you retire.
Figure out which account works for you
According to David Braze of The Motley Fool, there are several types of individual retirement accounts. For example, the spousal IRA allows for contributions for your non-earning spouse to a separate IRA.
Get matching contributions
Two types of IRAs, the Simplified Employee Pension (known as a SEP-IRA) and the Savings Incentive Match Plan for Employees (known as a SIMPLE), allow employers to contribute to employee IRAs. Obviously, having an additional or matching contribution to your IRA will increase the value, so be sure that you ask your employer to do so. (Use MSN Money's calculator to find out.)
Avoid getting overtaxed
Different tax laws govern different types of IRA and 401k accounts; the traditional IRA allows for some deductions on qualifying contributions, but withdrawals are taxed. The Roth IRA, on the other hand, does not allow for tax deductions on contributions, but it does provide for tax-free on qualified withdrawals.
After age 59.5, for example, you can withdraw money from your Roth IRA tax-free. You can also look into transferring money from a traditional IRA to a Roth IRA; doing so would allow you to withdraw the money earlier and use it on a purchase such as a retirement home.
Talk to a pro
It's a good idea to do your own research, educate yourself on your options and make informed decisions. You can get advanced help from a financial professional whose education and career focus on planning and saving for retirement. Get the most out of a financial consultant by doing your homework first. Come to the meeting with some basic understanding of the options, your own financial goals and your specific questions about how best to achieve those goals. With your consultant's insight and your own intelligence, you'll be able to find the best strategies for maximizing your retirement income.
Look outside the box
Don't be afraid to look at other options for raising and saving your retirement income. You can invest in real estate, become a venture capitalist, raise interest by lending your own money, or invest in items that have appreciable value in order to grow your retirement income. The best thing to do is become active in overseeing how your retirement income grows. Passivity is deadly. Get interested, get involved, educate yourself and start managing your future now.
The bottom line
Having enough money to live comfortably when you retire isn't enough for most people. It's also important to have a little extra so you can fulfill some of your lifelong dreams like traveling when you retire. Whether it be getting advice from a pro or saving earlier, there are many simple ways to make sure you're financially prepared for retirement.
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It's not easy when you have had pay reductions, no wage increases, cost of living going up
or a spouse loses a job......
Not every house hold brings in $100,00 a year. There is no such thing is a pension for the average worker these days, best to hope for is a 401k that gets little matching funds if any,
and then hope its value is up when you cash out!
Don't even get me started on the Insurance that we are forced to have that takes away from
the thought of ever have savings!!!!
Hey yankeeclipper, sorry this article is so beneath you.
Why don't you find another website that is better suited to your obvious brilliance?
Remember: The best things in life are free.
And, as it happens, you get to put all that unused money straight into your retirement accounts. **CHA-CHING!**
Start saving as soon as possible? The rest of it is just as insipid. Was it written by morons for morons? If so it was a success.
Yes, the answer is obvious, save more for retirement. This can be done no matter what you make. I could work at McDonalds and still save 10% of my earnings every month with two kids. What does that mean? It means living within my means no matter what, and "rationing" if necessary to achieve that 10%. Why, because you HAVE to take care of yourself no matter what. Nobody else will. Is it hard, yes. Would I have to work 6-7 days a week, Yes. Would I have to ride my bike or walk to work because I had no car, yes. Would I have no cable TV or cell phone, yes. Would I want to work even harder for a better life, yes. This is a real post. I grew up in a family of 7 kids with a construction worker Dad and a stay at home Mom. So people, look at yourself in the mirror, and know that only you can make your life better. Does it tick me off that people are born with a silver spoon in their mouth like Mitt Romney and have way more than me with less ability and hard work, yes. But that doesn't change my situation. Only I can improve my situation, whatever that starting point is based on who my parents are and whatever else fate has thrown my way. Stop whining, and do the best you can with the cards you were dealt.
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