Saving for retirement starts when you start your first job and you collect your first paycheck. It’s as simple as that. But that doesn’t mean you put 1 dollar out of every paycheck into a cookie jar and hope to have enough when you retire. No, there’s an element discipline involved, so that by the time you retire, you have enough saved up to enjoy your free years without having to worry about paying the bills. So here are some top tips to get you going in terms of retirement savings.
How to save for retirement
- Set a percentage aside from the very beginning. Conventional wisdom says 10-15% of your income should go into your retirement fund. This is a good, strong percentage, and of course as you earn more, the relative size of your installments into the fund will grow too.
- Live frugally while you can.When you’re just out of college, living in tough conditions is what you’re used to be it a shared flat with some classmates, a dorm, whatever. Take that into your first few years of employed life too. Keep the living costs on the down low, and you can save up a bulk of your retirement fund in the very beginning.
- Repay your debts. If you have a credit card, pay the dues on time. If you have a student loan, repaying it should be your primary concern. Don’t go out and buy a new fancy car or take a trip to France until you’ve repaid all that you owe. Getting back to a clean slate is the first step to saving up, and the sooner you get there, the better.
- Invest. Once you have enough money saved up, channel it onto avenues that can multiply your savings. Shares, mutual funds, property, whatever takes your fancy. Money just sitting in the bank and accruing interest is pointless, make sure it grows for you by investing, and investing wisely.
- Company plans. A lot of firms, to encourage savings, have schemes to help you along the way. A lot of companies offer to save a certain percentage of your salary for you, if you match that percentage yourself as well. When these opportunities come by, jump at them.
- Insurance. Get an insurance policy, especially one with a cash value if you can afford it. It’s a great way to secure your future, they come cheaper the younger you are, and they last for a life time.
- 401k and other investment plans. The government gives you a lot of tax-free options to save money. Investigate what’s on offer, and exploit them to the hilt. The benefit is dual, not only do you save money, you also save on tax! Why wouldn’t you go for it?
That should get you on your way towards your retirement fund. Remember, there’s no point buying a convertible if you’re so busy at work that you can’t take it for a coastal drive. So save up now, and chill like a boss when you have the time in your retirement.