As your retirement age approaches, you can’t help but think about how you’ll survive those many years without working. Consider that the current retirement readiness index in the U.S. is at 6.7 on a scale of 1 to 10. It shows that many Americans still don’t have adequate retirement savings.
If you keep spending all the money you get, you’ll sooner or later be part of those statistics. But you certainly wouldn’t want to be a burden to anyone once your strength and mental faculties decline and you can no longer be active in the workplace. To help you out, here are 10 ideas to grow your retirement nest egg:
Diversify Your Investment Portfolio
The ‘egg’ element in the title tells you not to keep all your retirement savings in one basket. Life has it that any investment, no matter how well-thought-out, can potentially lead to losses. Thus, you’d want to variegate your investment portfolio in the following ways:
First things first—the U.S. Congress crafted the 401k plan to help workers save for retirement. Typically, a predefined percentage of your gross or net income is deducted and stashed away for you until you retire. Some companies enroll newly hired staff automatically, while others leave you to decide. So make a point of checking this with the HR department to ensure you have an active account as soon as you start working.
The good thing with 401k plans is that your employer may also contribute to your retirement savings, depending on how much you save every year.
2. Individual Retirement Account (IRA)
While 401ks are employer-driven, IRAs are your initiative. You can open an account through a bank, an online brokerage firm, a federally insured credit union, or an investment company. You can choose to hold various investments in your account, like mutual funds, bonds, exchange-traded funds (ETFs), or stocks. These allow your money to grow and compound over time. Early withdrawals, which are those done anytime before you turn 59.5 years old, attract a penalty of 10%. That’s meant to instill some degree of discipline on your part.
3. Gold IRA
As mentioned above, a conventional IRA allows you to hold paper assets such as stocks and bonds. For a gold IRA, you hold precious metals such as gold, silver, and platinum. As you might already know, gold has for many centuries been a safe haven investment. In times of economic turmoil, when currencies and stocks decrease in value, gold tends to increase in value. Thus, it’s an excellent way to compensate for your decline in other investments.
You’d want to start a gold IRA by turning to a reputable company with a verifiable history of holding precious metals and that’s certified by industry watchdogs such as the Industry Council of Tangible Assets (ICTA) and Professional Coin Grading Service (PCGS). This way, you have the assurance that you’re not doing business with dishonest people.
That isn’t the only kind of gold investment out there, though. Technology has significantly revolutionized the gold market, and now you can look into other options like gold exchange-traded funds and gold contracts, among others.
You may read this article to learn more about how you can invest in gold.
This is a form of insurance where you give an annuity provider a lump sum of money and then they pay you an agreed amount at regular intervals—say, monthly—over a lengthy period. It’s a good way to ensure that your retirement savings don’t get used up too quickly. For the annuity provider, they get to invest your money for a profit, and that’s how they’re able to pay you back plus interest.
You can loan money to the national or local government and get good interest from the principal amount. After the agreed period elapses, you get back the whole amount you lent them. Retirement savings being your goal, you’d want to get long-term annuities instead of short-term ones. And see to it that you match the bond’s maturity date with your retirement date so you can ease seamlessly into retirement.
6. Rental Real Estate
Purchasing and renting out a residential or commercial building can provide you with consistent income after retirement. As long as you do thorough research on the profitability potential of a given area, you’ll definitely reap from your investment.
For best results, seek professional advice from experienced real estate consultants. But even so, keep in mind that there are months or years your property may fall vacant, meaning no income for you during this period. You’d be better off owning several properties.
Change Your Mindset
Saving comes with a great sacrifice. It usually entails more than hoping that your retirement account will miraculously grow. It takes a conscious effort to put money in there and let it stay until you quit working for good. Here are a few tips that may be of great help to you:
7. Live Below Your Means
Constantly adjust your habits and mindset to ensure that you spend much less than you earn and keep a sizable sum of money to stash away for future use. Please don’t make the mistake of maintaining a lifestyle that constantly strips you of all cash.
It may seem like an obvious idea to save money, but now is not the time to be frivolous with money. If you regularly treat yourself to unnecessary belongings then you may want to reassess your habits. Similarly, you should also look into getting rid of the assets you no longer need anymore. Certain things such as timeshares could be draining your savings, so consult the Wesley Financial Group if you require more information on exiting your timeshare. When you take a step back and assess your outgoings, you will soon realize where you can make cutbacks.
8. Write Down Your Goals
Brain research confirms that writing down intentions saves you from forgetting them too quickly. So jot down the things you want to do once you retire, and estimate the amount of money you’ll need each month to do those activities comfortably. Factor that into the years you still have at work, and calculate how much you should save each month.
9. Get Rid Of Debt
It’s challenging to save when you have big debts, especially those that accrue interest over time. All cash you get goes to clearing those debts, such that you’re left with not a single coin to keep untouched. Therefore, resolve to clear all your current debts as quickly as you can. And once you’re free of them, make sure you don’t get into debt again. Purchase products and services for which you have ready money rather than getting them and then promising to pay later.
10. Automate Contributions
When you instruct the bank to make deductions from your monthly earnings before you can even handle the money, saving becomes quite effortless. It’s unlike receiving money in your account and then having to take a portion of it and depositing it into a savings account. That’s because once you have the money, the temptation to spend it all usually sets in.
There are several investment options you can go for and certain lifestyle decisions you can make to ensure the significant growth of your retirement nest egg. Those mentioned above are an excellent starting point. If they’re well executed, you’ll have great peace of mind after retirement. And being that this is a money matter, don’t hesitate to seek professional advice from licensed financial advisors.