Helpful Hints on Saving for Retirement
These days, there are many Americans who will not and don't have enough saved for retirement and therefore unprepared for the risks they face during retirement. Many will have to work into their senior years to ensure their financial security, which is not what it once was in previous generations.
Traditional pensions are becoming a thing of the past and the responsibility of saving for retirement is falling on employees, rather than the employer. Now instead of a pension, companies are sponsoring savings plans such as 401(k) plans. It's up to the employee to enter the program, decide how much to contribute, where to invest, and how to handle cashing out when changing jobs. But because most individuals aren't professional investment managers, they are ill-informed as to what they should do and end up doing nothing.
Then there is the added burden of changes to the Social Security system--the qualifying age continues to rise and the system is constantly at risk for budget cuts.
Here are a few things you can do to help secure your retirement:
Start Saving NOW
If you haven't started saving for retirement, now is the time. The earlier you begin saving, the more you can save. Understandably, there are those Americans who only make enough to pay their bills, buy food and just get by. But if you can manage to put even just a little bit away, do so--every little bit helps.
Save More by Investing
If you get a raise, try living on the same budget you've been using and invest the extra money. This strategy can be applied to money you get from tax refunds, yearly bonuses, money from an inheritance or any extra money you may receive. If you can afford it, make a contribution to your 401(k)--the maximum, if possible. Use your bonuses, tax refunds and extra cash to increase your contribution.
Lower your Mortgage Payment
Another way to increase your savings is to refinance into a mortgage that lowers your monthly payments. Interest-only mortgages are good for this kind of thing because they allow you to pay only the interest plus as much or as little principal as you like--even none! By paying less toward your mortgage, you increase your cash flow. That extra cash can go towards making a bigger contribution to your 401(k). To learn more about refinancing, contact an experienced mortgage banker.
Get a Reverse Mortgage
Even if you've been saving for retirement and expect to receive Social Security benefits, there's always the possibility it won't be enough. To supplement that, you don't have to tap into your child's college tuition--that should be kept in a separate account. You can get what's known as a "reverse mortgage." You receive money from the equity in your home and you don't have to make monthly payments. It's not necessarily for everyone and you have to be 62 or older to qualify.
Too many Americans aren't going to have enough saved for retirement. The most important thing to remember is to start saving now and save as much as you possibly can. If you follow this approach you can enter your retirement years financially secure and emotionally sound.
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