If you’ve ever spent time talking to retirees about their lives, you know that they can have some great stories and sometimes great advice about everything from relationships to money. a A recent director study Retirees were asked to share some of the financial advice they’d like to give to their younger selves, and the first five answers listed below came up again and again.
Following these tips may not prevent us from making financial mistakes again, but if you stick to them as best you can, you can give yourself a good chance for a comfortable future.
1. Start planning for retirement early
Nearly 70% of retirees said they would encourage their younger self to start Planning for retirement Early in life: In your twenties, if applicable. It’s not always easy to do this, especially for college graduates who have a lot of student loan debt. But even if you can only save a few bucks each month, it is worth setting it aside for retirement.
Usually your early retirement contributions are most valuable because they have more time to grow. If you invested $ 100 today and earned an average annual return of 7%, you’d be worth roughly $ 1500 after 40 years. That’s $ 1,400 profit. But if you wait five years to invest $ 100, you will end up with about $ 1,068 after 35 years, less than $ 400.
Even if all you have is an additional $ 5 or $ 10 bill in your wallet at the end of each month after paying your bills and creating an emergency fund, invest it. This will make saving enough for retirement a lot easier because you will have more investment profits to help you cover your expenses.
2. Keep educating yourself about finances
There is always more to learn about managing your money. This is especially true for retirement planning because it takes decades, and a lot can change in that time, including government rules Retirement accounts And our lifestyle and our plans for retirement. We have to know how to adapt to these changes in order to keep ourselves on the right track to achieve our goals and make the best choices for our money.
One way to ensure we can do this is to keep asking questions and trying to do better. Learn more about How to investFor example, it can help you make smarter choices about where to store your retirement savings so you can grow your nest faster and maybe even retire sooner than you expected.
3. Stay healthy
Maintaining your health may not seem like financial advice, but your health and your finances can easily get intertwined. If you are in poor health, you will likely see a doctor more often and pay for more of the prescribed medication. You may also have to retire earlier than you expected, which causes you to struggle to get what you were able to save up to that point.
Focusing on your health may not help by eating right, exercising regularly, and learning healthy stress management strategies Health care expenses Totally in retirement, but can reduce them. This can lead to a longer, happier retirement while spending more money on the things you enjoy rather than doctor bills.
4. Strike a balance between saving for the future and living for today
Saving for the future is essential if you are hoping to retire, but you also have to meet your needs and desires in the present. The movement was known as Financial Independence, Early Retirement (FIRE) People are encouraged to cut their budgets to a minimum, and they often give up fun activities, so they can save as much of their income as possible and retire decades ahead of their peers. There is nothing inherently wrong with this approach, but it is not something that will attract everyone.
Not allowing yourself to do anything fun in the present can make sticking to your savings plan even more difficult in the long run. It is best to have a sustainable long-term plan. knowledge How much you need To save monthly for retirement when you want. If this is not possible, consider delaying retirement or looking for ways to increase your income for the time being so that you can save for your future and have some money to enjoy now.
5. Make use of the employer’s 401 (k) matching funds
Nearly 40% of retirees surveyed said they would encourage themselves younger to choose a 401 (k) deferment ratio that enables them to benefit from Company match. This is free money you get just to plan your future, but it’s a limited-time offer. If you don’t put enough money in 401 (k) during the year to get the match, you lose it.
We hope you are already contributing at least enough to 401 oC To get a full match, but if not, the first step is to figure out how your company’s matching system works. Some might offer a dollar match against the dollar while others might offer $ 0.50 a dollar. Most companies limit your match to a percentage of your income.
Once you know what you need to do, try to increase your contributions accordingly. You may have to make changes to your budget, but it is worth doing because it reduces the amount you personally need to save for retirement.
The five responses above were the most popular of retirees’ financial advice, but they aren’t the only ones worth pursuing. Think about your own financial history and what you would like to improve. Then, seek advice on how to do this.
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