When it comes to retirement, the earlier you plan and save, the better. Because of compound interest and tax deferrals, you can benefit more the earlier you start saving for retirement.
Do you know how much you need to save for retirement? How can you maximize your savings?
These strategies will help:
1. Think about the kind of retirement you want. Will you want to live differently when you retire? Start visualizing the type of lifestyle you want to live when you retire so you can tailor your savings goals to that lifestyle!
How old do you want to be when you retire?
Will you still work part time?
Where will you live? Do you want to live domestically or internationally?
Will you be renting a house, or will you own your house?
What will your monthly costs be?
2. Start saving today. Most (if not all) articles you read about retirement will encourage you to start saving today. The reason being is over time you can earn money from your savings via compound interest.
Compound interest is the interest you earn on interest. It comes from reinvesting the interest you earn. It works in your favor.
Hypothetical examples suggest that even a 25-year-old who invests $75 per month would accumulate more assets by 65-years-old compared to a 35-year-old who invests $100 per month.
Put as much as you can away now so that you can reap the rewards later.
Some financial experts recommend saving 15% of your pre-tax income towards tax-advantage accounts.
3. Set a goal. Take time to carefully consider retirement expenses while factoring i