A financial planner can help improve your retirement game plan and strategy, but there are some basic strategies they will give for free.
You don't have to get it exactly right — just start
It's never too early to start investing in your retirement. In fact, the very first step is quite simple: start saving. It's better to get started saving in a simple way than to spend time trying to 'get it right' meanwhile not saving at all.
How much you need to have saved to retire will depend largely on how much you plan to spend in your later years. Once you have an idea of what that number is, you can break it down into smaller, easier goals.
Basically, everyone's retirement goals are going to be different. Different careers, like oral surgery, locations, lifestyles, and other factors play a role in determining the right about, but having a goal will put you in range of where you need to be. It's better to be safe than sorry!
Take advantage of your employer match
If you have the option to take advantage of an employer match 401-k program, you should be using it. Even if your employer matches a seemingly small amount, over time it adds up and can really make a significant contribution to your retirement savings.
Another thing to consider is if you have debt, this contribution is a way to continue putting away for your retirement and pay back your debt simultaneously.
At the very least, you could be putting away the minimum amount to receive the full match, and keep the rest of your paycheck for other necessities.
Don't depend on Social Security
Right now Social Security constitutes about one-third of all the income received by retirees, according to research conducted by United Income and the Social Security Administration, but that's changing quickly.
The Social Security trust — the government-run program that provides benefits to retirees, the disabled, and their families — will be underfunded as soon as next year, and Gen Xers and millennials are already preparing to pay for retirement largely on their own.
Make thoughtful investments
Think of a retirement account as more than a savings fund. When you contribute, the money doesn't just sit there until retirement — you decide how to invest it. And that's where many people seem to lack understanding.
In short, if you have a 401(k) then you're as much an investor as you are a saver. Look for funds that diversify your portfolio and be wary of fees associated with certain investment accounts and advisors.
Save for retirement health costs in an HSA
Health savings accounts are exactly what they sound like: savings accounts that can be used for expenses related to your health, whether that be for specialty medication or treatments like IV therapy — now, in retirement, or any time in between. An HSA lets you invest your savings for maximum growth and offers major tax advantages along the way, explains financial planner Carrie Schwab-Pomerantz in a Business Insider article.
You need to be enrolled in a high-deductible health plan to contribute to an HSA, but they never expire. You can use the funds for qualified health costs at any time and continue to grow the money, even if you don't enroll in a high-deductible plan later.
Time is the main factor in taking full advantage of HSAs, which could prove to be extremely helpful in those potentially expensive later years of life. It's always smart to do research beforehand and try to understand what you're signing up for.
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