Start Early
Reverse engineer it by figuring out where you want to be financially in 10, 20, 30, or 40 years from today, and work backwards from there. What do you have to do now to get where you want to be when you retire?
Contribute, At Least, Up To The Match, On Your Job
If your job matches a portion of your contributions to a 401(k) plan, then you are doing your future self a huge favor by contributing up to the match. The match is FREE MONEY. Never leave free money on the table.
Be Consistent Over A Long Period Of Time
Despite what you may read or hear about from social media and the talking heads, it is still possible to save, and invest your way to a comfortably wealthy place. If you start and invest consistently over the course of some years, it can happen.
It Is NEVER Too Late
Given the fact that many of you reading this are in your 40’s or 50’s, you may be wondering if it is too late. The answer is a resounding “NO”. Put savings at the top of your budget, start or increase your contributions, and get going. If you are starting late your biggest hurdle will be your mindset and your habits. It is possible if you believe it.
Get A Roth IRA
You do not have to max out your retirement account at your job. You should seriously consider only contributing up to the company match, and then opening a Roth IRA, and invest under your Roth IRA. A Roth IRA is a retirement bucket that is after-tax contributions.
Click HERE for a great article about the differences between the Traditional IRA vs. the Roth IRA
Check The Investment Options At Your Job
Proper allocation is extremely important for strategic long-term growth. Do not get caught being too conservative, or worse, unaware of how your money is distributed inside your job’s retirement plan. Do your homework!
Don’t Touch It.
Never borrow money from your retirement account. Ok, if you are in a dire extreme emergency, there may be an exception. But this is money that you are saving for yourself. If you decide to touch the money, you will pay penalties and you are only hurting your future self. Make it a rule to never touch it and to not think of it as an option.
When You Leave Your Current Job, Transfer The Balance To Your New Job.
Do not make the mistake of allowing your current employer to cut you a check when you separate from them. You will pay up to a 40% penalty on the money you have been saving for years, directly to the government, in early withdrawal fees. That is a killer. Be 100% sure your money is transferred or rolled over.
Focus On Your Physical Health.
What good is your wealth, managing your money, the growth of your investments, and all the time and energy you spend wealth building, if you are not healthy enough to enjoy it all. Perhaps this means changing your eating habits, walking, and working out much more often, and focusing serious efforts on your physical well-being. Any thoughts about retirement must include a serious discussion about your health.
Don’t Skimp On Your Retirement For College Savings.
The most important person to take care of the old you is the younger you. Do not get caught overlooking your retirement for the outrageously high expense of college for your child. It is a nice gesture to want to help your child, but it can lead to a heart-wrenching outcome when you find yourself having to work well into your 70’s because you were paying an exorbitant amount of tuition for your 19-year-old.
Retirement will be here before you know it and building and protecting your retirement savings is one of the biggest and most important financial goals for most people. It’s never too late, or too early, to start to think about building your retirement nest egg.
