If you want to ensure a comfortable life in retirement, you’ll need to plan for it today. Even if you are currently in your early twenties, retirement comes along quickly.
Short Falls of No Savings
Without saving for retirement, you’ll need to rely on income solely from Social Security retirement benefits. Unfortunately, Social Security is designed to supplement retirement, not as the only source of income. Without savings, you will fall short on housing and living expenses. You can borrow money in the form of a small loan.
Investment in the Stock Market
Investing in the stock market comes with risk. There is no guarantee that you will earn a return on your investment. However, with a professional broker creating a diversified portfolio that includes both low-risk stocks such as utilities and high-risk stocks, including newly introduced products, you can end up with
401k Retirement Fund
Most large companies include an option of a 401k in their benefits package. In many cases, the company also matches your investment by up to 3 to 4 percent. This will double your savings for retirement. Leave the money alone for a period of twenty or thirty years and you can cash out with a value that exceeds a hundred thousand. Another nice feature of the 401k is that once fully invested you are able to draw a portion of the funds. This can help you come up with a down payment for a home. Best of all, the repayment is to you with interest.
Roth IRA Retirement Pension
Roth IRAs are popular because the funds collected already have taxes collected. So when you cash out in retirement, you don’t owe any tax debt. As funds grow in size through investments in selected stocks, so does your nest egg, which is tax-free. It also offers similar borrowing methods as a 401k allowing you to best utilize your own savings when you need it the most. You can withdraw money to buy a home, start a business, or put children through college.
One of the best ways to guarantee you live well in your golden years is to set a goal to become debt-free. You can have many nice things. However, if you have loans out against these items, your money is not yours. Make an effort to pay down your debt a little each year so that upon retirement any source of income is yours.
Owning a Home
Many people long for homeownership. It’s a sign of achievement. However, homeownership is not for everyone. In addition to the monthly mortgage payment, you also have many other expenses such as property and school taxes, homeowner’s insurance, and maintenance. If you can afford the home and the additional out-of-pocket expenses that come with it, owning a home is beneficial. It’s an investment that, upon selling, can pay huge dividends in your retirement. However, if you can only afford the mortgage and struggle to pay taxes and make repairs, you’ll end up drowning in debt.