How to Save For Retirement
How to Save For Retirement – 3 Common Sense Principles to Guide You
How to save for retirement? This question has been asked by everyone planning for retirement, and has become the “million dollar question” without a doubt. We’ve all seen the flashy ads that say “I’ll show you my 5 steps to retire with a million bucks in the bank”. Many of these ads go on to say that you don’t have to be a banker on Wall Street to accomplish this, and that many middle class Americans do it every day.
Well, here’s some good Free advice…don’t trust any one who claims to have discovered the secret to amassing wealth in a number of easy steps! If you want to know how to save for retirement, here are the three common sense methods to answer the question. Start Earlier…Save More… Retire Later. This is not any secret that I discovered. Any financial planner will tell you that you need to establish good financial habits and live below your means, and save.
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There’s no guarantee that you’ll be able to reach that magic million dollar level and we need to be realistic. Some of the financial gurus with those ads will show you that you can reach one million, assuming the annual investment returns are 20%. Well guess what, that is not going to happen.
Granted, the rate of return may hit that figure in some years, but for practical purposes, an average rate of return of 5% to 7% after fees is more realistic. As we mentioned above, by starting earlier, and with compounding, you’ll be able to reach that number much easier and sooner.
To save more for retirement, you’ll have to spend less, and this is a good thing. By doing this, you will be living below your means and your lifestyle in retirement won’t require a higher amount of cash.
By retiring later, your retirement savings will have a longer period of time to grow. Another benefit of retiring later means that you’ll start collecting social security benefits later, resulting in a higher benefit payment.
For every year that you postpone retirement means that you’ll receive larger payments from your pension if you have one, and from social security. This could mean that your retirement nest egg wouldn’t have to be as high because you would have less retirement years to fund.
So, back to the beginning and the million dollar question. You saw how to save for retirement, but will a million dollars be high enough for you? Many financial planners feel that it may not be enough, and for that reason, recommend retiring later, health permitting.
When you ask the question, how to save for retirement, remember those three principles, start early, save more, and retire later, and maybe that magic million dollar figure will be enough for a comfortable lifestyle.
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16 responses to “How to Save For Retirement”
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Gust Lenglet – Platinum Author
This is very helpful to people who wants to be prepared for their future and to those who are starting out to get conscious about it. The earlier you start allotting money for your retirement the bigger amount of money you will receive. In order to save? Stay away from things you don\’t really need.
Good advice! I really don’t want to retire later, so I have money taken out of my check for 401k and stock purchase, forcing me to live below my means. I have just gotten used to living with a certain amount. I have added 1% every year and I am at 4% …I plan to stop at 6% which is the max my company will match.
Good for you Ryan. Many workers don’t think about retirement until its too late. Keep doing what you are doing and you should be able to have a comfortable retirement.
I would love to get started on saving for retirement. It’s been rough though, with such little pay and I’ve had to dip into my savings often in order to pay bills. Then banks give such tiny percentages for savings accounts…
Great post! 🙂 Hope many of your readers will learn a lot of things and will be able to have a comfortable retirement. Continue posting stuffs like this! 🙂
I have found that the traditional methods of retirement planning just won’t work for us any more and we really have to get on the ball and start saving earlier and working longer. It’s not a sunny outlook, but it is a very real way to look at our financial future.
Hi Gust,
You got great advices here. Thank you for sharing this. This post is really helpful especially to those who want to prepare for their retirement. I think that if we really want to save for our retirement, we really need to spend less and live below our means.
Plan is the most powerful asset for everyone especially for those who going to retirement soon. I think your advice really help them for long time and it will bring positive results. Save on retirement without planning can’t bring positive result. Thanks for your great share.
Yes. The earlier you start saving for retirement, the larger retirement money you’ll have. So let’s all plan our retirement early
With such title pay, lets all plan our retirement early.thank for your great share. I love your share. thank you…
“Start early, save more and retire later” Simple principle although NOT in any way easy. Could you add earn more while living far below your means? I know that there are many high earners who do NOT have enough for retirement but I believe that is because they have poor financial habits and NOT just because they earn more. The more a person earns the more they can save all other things being equal– Don’t you agree with me?
It is not easy to get started early for everyone. But you can say one thing, when you do get started, never become lazy. Cut your expenses that are unnecessary. This will lead towards a secure retirement.
Thanks for your comment Rhonda. Yes, everyone doesn’t/can’t start their retirement planning early, but as you say, we can put more into retirement accounts if we cut out the frivolous spending. Thanks for the insight.
Great stuff! It isn’t easy to get started, but once you do sky is the limit. We have to eliminate unnecessary bills so that we can save in order to help prepare for our retirement.
Thanks for this guide. It is surely helpful to all people who are planning and preparing for their retirement. Thanks for sharing.
Great tips you shared! Really amazing and realistic. Certainly this will help many who will retire soon. Great job because money crisis after retirement is devastating.