The new year is the perfect time to check your retirement portfolio and instill habits to prepare you for when you retire. Oftentimes, people are shocked when they realize how much money they will need to live off of in retirement. By preparing properly, you will be able to increase your chance to live comfortably in retirement. If you are looking for tips to help you improve your retirement portfolio, keep reading!
Increase Your Savings Rate
Boosting your savings rate will put more of your income into your savings accounts. Maximizing your 401(K) and IRA contributions provides more money for yourself to live on in retirement. If your employer provides a 401(K) match, you need to be taking advantage! If you receive a raise at work, contribute it to your savings. These opportunities allow you to grow your retirement savings even more with little effort.
Reduce Your Expenses
One of the easiest ways to find money to contribute to savings is by cutting out unnecessary expenses. Review your budget and monthly subscriptions to find what items you are spending excess money on, including eating out and streaming subscriptions. With the money you save by cutting costs you can increase the amount of money you can add to your interest-building accounts. Reducing your expenses will be helpful long term because it will help you learn how to live off of less money, just like you might be doing in retirement.
Invest, Invest, Invest
Make your money work for you by investing in return funds. Instead of having your savings sitting in cash, you want your savings to continue to grow upon itself. You do not have to invest in something high risk. Mutual funds can be a great way to build your savings by setting aside a small amount of money with the goal of watching it grow.
Try a Short-Term Retirement
Taking a sabbatical can give you a taste of what retirement will truly be like. Do you want to pick up an expensive hobby? Do you want to fill your time with travel? A short-term retirement allows you to decide if your savings are on the right path to be able to accommodate for these costs. If you do not think you are on the right track, you are able to change your savings plan before it is too late.
Manage Your Debt
Aim to pay down your debt before retiring to avoid large payments on a fixed income. Start with the highest interest debts, such as credit card debt, because this will cost you the most in the long run. Next, move to car payments and your mortgage. Reducing your debt frees up money that can be contributed to savings and allows you to not have to plan for these big expenses in retirement.
Financially preparing for retirement can be stressful but as long as you put a plan in place, you will increase your chance to be able to comfortably enjoy your retirement! To learn how Money Pros can help, give us a call at (402) 454-7204 or email me at jason@fp-wealth.com.
Mutual Fund investments are not guaranteed by any source and can lose money including principal invested. Note: Differing classes of shares have varying expenses, loads, fees and breakpoints. These differing classes also have time line holding periods which are appropriate depending on the investor objectives and goals. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.
Sources:
https://www.nasdaq.com/articles/4-retirement-tips-for-2021-and-beyond-2020-12-12