Retirement can be a scary thought. For starters, it means that you will be on the tail end of your hopefully fulfilling life to this point, but it also means that you can live out your golden years free of work, and start to check off any bucket list items that still remain that you still need to live out. With social security not going to cover what a salary would be, it is necessary to start working now to make sure you have sufficient savings in retirement.
Figure Out How Much You Will Need
Sure, we all would like to think that we will have millions in the bank by the time we retire, but while that is not realistic unless you are on track to have that saved, you will need to figure out how much you really need in retirement. Will you still have a mortgage? Will you still be providing for children, even if they’re grown? Adding up all of the necessary bills, health care, and spending money that you think you will need, and then how much to put away a month until then, hopefully with a decent return each year leading up to.
Don’t Put Saving Off Any Longer
Although retirement is decades away and the furthest from our minds when we get out of college, that would be the optimal time to start saving, because if you have a large sum that you are needing, the earlier you start saving, the better, otherwise the longer you wait the more you will have to contribute each month to catch up to the amount you are hoping for. Between 401(k), IRA, and brokerage accounts out there, there are plenty of savings options out there to have ample amount, but it is on you to take that step.
Avoid Leaving Money on the Table
If you are unsure of where to start, start with a 401(k) from your employer, and as far as contribution amounts, first check to see if they offer a matching contribution, so at least you can contribute the maximum that your company matches. After that, you can look to increase each year. If you are not contributing the max of what your company matches, you are leaving money on the table that over time could be thousands upon thousands that you will wish you had when it comes time to retire.
Keep a Stash of Cash
There always seems to be something that comes up, whether it be car repair, the furnace breaks down, or God forbid, a job loss, that will cost you money, so instead of put on a credit card or dip into your retirement savings which will cost you money in the long run, it is good to have a reserve of cash to have on hand in case of an emergency. Experts say between three and six months’ worth of expenses are enough, but some argue that having too much in an account that is not growing interest is just a waste, so maybe closer to three months is best.