It’s no secret that building up a retirement savings account is key to sustaining a high quality of life during your golden years. Sure, it’s essential to have money for the bare necessities now — as well as the not-so-bare necessities — but don’t steal from your future self just to make life easier today.
By making some small changes to your financial routine, you can have the retirement you’ve always dreamed of. After all, would you rather slip into your sunset years in abject poverty, or sipping a mojito pool side?
Begin As Early As Possible
It doesn’t take a math genius to determine that the younger you are when you start saving, the more you’ll have when you retire. Nearly half of all Boomers who are still working say they don’t expect to retire until they are 66 or older, including one in ten who predict they’ll never retire. But even if you don’t exactly know when you’ll retire, coming up with a savings plan and sticking to it can yield some surprising results.
For the skeptical millennials and those in Gen Z who fear they’ll never be able to afford to retire, think again. CNBC reports that those who start saving $14 a day when they’re 23 will be millionaires by the time they reach age 67, assuming a 6% annual investment return. In retrospect, those who start saving at age 35 would have to save $30 per day to reach millionaire status by the same age.
Use Technology To Your Advantage
Many of those who are saving for retirement don’t yet understand the full potential of technology. But there are countless investment tools, programs, and apps available to help you save without even realizing it. Most people know that you can make automatic contributions to your retirement account from your pre-taxed income. However, many retirement plan providers have systems that can ‘auto-increase’ — which means that the percentage you’re saving automatically increases over time.
Auto-increase systems allow you to personally configure how much you want your savings percentage to increase by, and how often. This allows you to accrue exponential savings without even realizing it. If you’re unsure about whether or not your retirement plan provider offers options like this, simply call and ask. You may get some unexpected yet insightful information.
And if that last paragraph went over your head, check out this list of savings apps (including one that literally saves money while you sleep).
Calculate The Right Time To Receive Social Security
Finally, being careful about when you choose to start receiving social security benefits can help you maximize their value and make every penny count. The average age of retirement is 63, but you can start receiving social security benefits as early as 62. Keep in mind, however, that your benefits will be reduced permanently. If you choose to receive benefits from Social Security prior to the year you reach full retirement age (FRA), your benefits are automatically reduced by $1 for every $2 above the annual limit that you earn.
Investopedia explains, “In the year you reach FRA, your payment will be reduced by $1 for every $3 you earn above the limit in effect for the year, but the Social Security Administration will factor in only earnings before the month you hit your FRA. The month you’re at FRA, you can receive your benefits with no reduction.”
If you can build up a substantial enough savings to hold off on Social Security until age 70, you’ll be able to receive an even higher monthly payout. Just another incentive to start saving while you’re young.
Ultimately, being proactive about your retirement savings is the best way to enjoy your golden years as much as possible. According to AARP and the National Conference of State Legislatures, 90% of people over the age of 65 want to live in their home as long as they can, and knowing that you’ve taken every step possible to form a substantial savings allows you to maximize your options and your quality of life.
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