Spend Wisely and Save AggressivelyIf you start saving $100 per month for retirement by age 25, you’ll have more than twice as much money squirreled away than if you’d started ten years later.
Pay Off Your DebtMonthly debt payments can be a huge hindrance to saving for retirement. Imagine if you were living debt-free. The cost of your car payment and your credit card bill could be money that you are investing into your retirement plan each month.
Diversify Your AssetsOnce you start saving for retirement, you need to consider how best to invest your money and make it grow for you. According to Round, an active investment platform, it’s important to diversify your assets, meaning that you are not putting all your money into one type of investment.
Diversification helps to minimize the risk of any one type of investment by spreading your money into several types of assets. That way, if one market crashes, you won’t have lost all of your retirement savings.
Take Advantage of Employer-matched ContributionsMany employers offer tax-deferred 401(k) plans that will match your contributions up to a certain percentage. Matching funds are effectively free money on top of the amount you are already investing into your retirement account.
Monitor Your PortfolioAlthough you do not want to cause yourself undue stress by monitoring every up and down of the stock market, it is wise to evaluate your investments on a regular basis to make sure that they are still working effectively for you.
Be Prepared for EmergenciesIf you aren’t prepared for life emergencies, you will, at one point or another, be tempted to withdraw funds from your retirement account. Prepare for this possibility by creating a separate fund for life emergencies. Dave Ramsey recommends a fund that covers three to six months of expenses.
Invest Your Spare ChangeSome investing apps allow you to round up each transaction, contributing the change to your investment account. These little contributions add up quickly and are a great way to contribute a bit extra to your retirement fund each month. Every bit counts, especially when added up over the span of the next forty-something years.
Increase Your Savings as Your Income IncreasesYou may have to start off making relatively small contributions as you begin saving for retirement. As your salary increases, so should your contributions. Aim to contribute no less than five percent and no more than half of your income to your retirement portfolio.
Speak with an Investment ProfessionalUltimately, even with all the advice you can find online or in a book, it is always advisable to speak to an actual investment advisor who can make recommendations based on your unique situation. Typically, an investment advisor will charge one to two percent of your annual investment amount. Knowing that you’re on the right track to retire, though, is worth the fee.
Time Flies So Save For RetirementRetirement may be the last thing on your mind in your 20s, but you will be amazed at how quickly the years fly by. Start saving now. If you wait to start saving until your 40s or 50s, then your dreams of how to retire a millionaire may never become reality.
The Epoch Times Copyright © 2022 The views and opinions expressed are only those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.