There is never a wrong age to begin saving for retirement, and when it comes to saving money, there’s no time to begin like the present. Here are three tips to keep in mind on how to properly save for your retirement.
1. Open and Fill Your IRA or 401k
If you have yet to open an individual retirement account, get started now. Depending on your income level, you may opt for Traditional IRA or Roth IRA, which you will then add funds into with a maximum of $5,500 annually (or $6,500 if you’re 50 and older). Aim to max out those limits. If you have already been doing so, you’re on the right track, and you may want to consider maxing out your 401k too, which has a $18,500 limit – or more if you’re above the age of 50. You should also automate your contributions to these accounts so you don’t forget about them.
2. Invest for Passive Income
Investments and assets carry a lot of importance in your retirement years. If you have not been making investments, better late than never. If you have, take a look at your asset allocation and be aware that the<br>investments that you pursue should increase in conservativeness as you age. Consider investing in stocks or bonds, or investing in rental real estate. This will provide you with a source of passive income.
3. Take Advantage of Employer Contributions
Your employer may have offered to contribute to your 401k plan. As an example, they may match up to 40% of your contributions to a limit of 10% of your annual salary, but these numbers differ by employer. Ensure that you are contributing enough to your 401k plan in order to make full use of every single bit of the funds allocated by your employer. Max out their contribution limits so you’re not leaving behind what is basically free cash for your retirement!
4. Handle Debts
Retiring with debts can make life much harder. Try to reduce your expenditures and focus on clearing old bills and debts. If you have a debt that isn’t easy to clear, go for a reverse mortgage. Typically, a senior reverse mortgage is a loan available to those of the age 62 and older. This will allow you to receive funds based on the equity of your house, part of which you must use to pay for its mortgage. The loan will not be due until you leave the home.
Properly saving for your retirement is not a task to be taken lightly, as it can greatly affect your quality of life in the twilight of your years. If you start today or have already started, you will be right on track to a stress-free and relaxing end to your years of hard work.