Saving For Retirement – How Important?
Saving for Retirement Like the Professionals
There are certain professions where it pays to have insider information. The truth is that professional financial advisors put saving for retirement as a top priority.
Financial professionals have witnessed over and over the effects of not having ample security in the golden years. Retirees often find they do not have enough money saved or enough emergency savings account money saved to allow them to live the way they have always dreamed.
When you plan for retirement, it is important to also plan for the unexpected when saving for retirement. You may decide in your later years that you suddenly want to travel the world instead of downsizing in an adult community. Your spouse may die or become ill or you may have had a series of unexpected events happen that you were not prepared for.[bctt tweet=”Have you planned for retirement properly? If not check this out…” username=”HBSMoneyTips”]
The age of being able to live off your pension and social security benefits is over. Because of all of these factors, the professionals tend to diversify their retirement accounts, as well as have long term care coverage in case of illness, emergency savings account, and adequate life insurance. They also start planning and saving early in life by deciding where to put emergency savings.
Many employers offer matching retirement contributions. This is something that you should take advantage of early. After knowing your saving and spending habits, budget your finances so you can put a lot of your money into your retirement each pay period. Decide if it is best for you to invest in a 401k or an IRA. With a 401k, you are not taxed until the cap is reached or the money is withdrawn. With an IRA, your contributions are taxed. In today’s world, more people are opting for the IRA and deal with the taxation up front.
An Emergency Savings Account As Part of Savings for Retirement
Next is to diversify your retirement money between stocks and bonds. There is a rule of thumb that the percentage of your money that goes into bonds should be equal to your age. If you are age 40, 40% of your investment money should go to bonds. The closer you get to retirement, the more percentage of bonds you should have. This percentage varies by the individual, risk tolerance, and savings for retirement by age.
Investing in long care coverage as you advance in years is very wise. Unexpected illness or injuries often leave couples broke with little choices. Protect yourself and your loved ones by investing in long term care coverage.
An emergency savings account is a true nest egg when saving for retirement. An emergency savings account is for the unexpected events that happen. If you have planned well, you will never have to dip into your emergency savings account and this can be passed down with your estate when you die. However, if you need extra money once you have retired, this fund can be drawn from.
Life insurance for you and your spouse is important. Whether you choose term or a standard policy, having that coverage will be an asset to your financial situation during a time of stress and sadness.
Planning ahead and saving for retirement is one of the smartest financial decisions you can make. Protect your future by funding an emergency savings account because you deserve to live a carefree life.
Sign up for new posts & relevant tax changes
We do not share your email address with anyone – ever.