Tucking away finances for retirement can seem impossible for many individuals since most have minimal income and never-ending expenses. However, despite small paychecks, if you’re still working and earning cash, it’s not too late to prepare for retirement. Instead of focusing on the things you can’t control, it’s better to pay attention to what you can control. These aspects can include your current spending habits, lifestyle, savings rate, and where you allocate your assets.
The best way to achieve financial stability is by starting early and making the right moves. To help you, here are five ways you can financially secure your retirement.
Embrace Tax-Deferred Retirement Plans
Most employers are now offering defined-contribution plans to their staff, which consists of tax-deferred retirement accounts where employees contribute a portion of their money, and their employers make a similar contribution. The most popular types of defined-contribution plans include 401(k) and 403(b). The process can be tricky. If you’re having a hard time choosing between the different offers, it’s best to hire a defined contribution specialist for better-informed decisions.
Cut Your Expenses
A simple method that you can do to save money for your retirement is by cutting your current expenses. The best way to start this is by creating a detailed list of your monthly spending and see where your paycheck goes. You’d be surprised to see that there will always be unexpected expenses that add up to your bills.
Making adjustments such as making coffee or cooking meals at home and saving on your electric, gas, or phone bills can drastically reduce your expenses. What you save doing these changes can add up more to what you’re putting aside for your retirement savings.
Investments can include mutual funds, bonds, stocks, real estate, or exchange-traded funds, and this can become confusing for the average person. This part is where you will need to seek professional advice from financial advisors or do intensive research about investing for your savings.
Get the Appropriate Healthcare Coverage
Getting health insurance is essential if you want to be financially secure when you retire as life can be unpredictable, and when accidents happen, medical bills can become alarmingly high. That’s why having the right medical coverage can protect you from expensive hospital charges and save you money over time. Even if you qualify for Medicare, it’s best to get supplement insurance policies to cover expenses that Medicare doesn’t
Get Social Security at a Later Time
The time you take your social security can impact your finances for the future. Although you can get social security between the ages of 62 and 70, the age you take social security can make a considerable difference in the amount of money you can get. When you take social security at 62, you will receive less than 25% than if you wait for the ‘full retirement’ age. However, for individuals who wait until they reach 70 for their social security, they will receive over 32% more than the ‘full retirement’ age, ranging from 66 to 69.
Consider Your Home
Ideally, if you own a house, it’s best to be mortgage-free before retiring to ensure you get to live life to the fullest without worrying about debt. The extra expenses can affect your retirement savings, so determining the time required to pay off your mortgage fully should be included in your savings and planned retirement date.
Take these steps to heart, and you’ll be enjoying your financially secured retirement in no time.