As an old Chinese proverb goes, “the journey of a thousand miles starts by a single step” What does this Chinese proverb mean? That today is the best day to start saving for your retirement if you have not started doing so already. Unfortunately, saving for retirement has always been a very sore subject for most people all over the world, but it is a true fact that married couples need to treat it with the seriousness and magnitude that it deserves.
Of you are planning to retire by the time you reach the age of 65, it means that your retirement kitty should have enough funds to replace your income for a minimum period of 12 years. How do you ensure that you get enough money to take care of you and ensure you lead a comfortable life throughout your sunset years? Here are some of the five ways you can avoid destroying your retirement kitty.
Max out the match employer contributions on your 401K plan
The first way you can avoid blowing up your retirement kitty is to take advantage of the 401k plan if it is offered by your employer. Ensure you make it a top most priority to max out the matched employer contributions. Needless to mention, this is basically free money that goes towards your retirement kitty. One thing you should keep in mind is that any money contributed to the 401K plan is often tax deductible. As such, you should talk to a financial advisor to know more about what you stand to gain, or lose with your 401K investment plan.
Complement your 401K plan with an IRA Account
Having an IRA account has so many great advantages, both tax benefits and otherwise, that you can take advantage of and enjoy. How it works is that once you reach the age of 591/2, you can withdraw all the money you had been contributing without any penalty as long as you have had active contributions for at least 5 years. To avoid blowing up your retirement contributions, ensure you wait until maturity in order to withdraw the contributions.
Reduce your Expenses
Even if you had all the money in the world, if you do not know how to budget and plan your finances accordingly, you are likely to blow up your retirement in a very short period of time. in order to achieve your retirement savings objectives, you will need to live slightly below your means, and then within your means once you get your retirement fund.
Diversify your investment portfolio of your retirement fund
One way you can make the retirement fund work for you is to diversify your retirement portfolio. How? Remember that during an economic slump, retirement accounts tend to take on very high hits, meaning withdrawing from the kitty at such a time could mean significant losses. Having a well diversified retirement investment portfolio will mean that you will get the best of all worlds.
Work for as long as you can
Just because it is said that you should retire at 65 doesn’t mean you should. As long as you are in good overall health and have the energy to continue working for several more years, you can continue working for as long as possible until you can no longer take it anymore. This way, you will avoid plunging onto your retirement kitty very fast as the extended work years would mean some more sources of income apart from your retirement kitty.
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