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Money Matters Blog

Tuesday, June 9, 2015

Don't Think Decades, Think Days: Tips for Retirement Savings

Graduation is coming. School's almost over. If you're like I was, you're thinking about three things:
  • Summer is coming.
  • I hope I don't have to plan any reunion ever.
  • Time to start saving for retirement!
Okay. Did I at least get two out of three? But if you aren't thinking about saving for retirement yet, you're not alone. According to the National Foundation for Credit Counseling, 32 percent of adults save zero percent of their income for retirement every year.
That's one out of every three people saving absolutely nothing for their future.
Don't be that one person. If you're not saving now, ask yourself why not. Is it because you don't think you make enough? A dollar a day can make Future You that much happier. Besides, you're not just saving up a bunch of money for the sake of having a bunch of money. You're figuring out how you want to live, and what it will take over the coming years to maintain that lifestyle, especially if you decide you'd like to work less later on, or not at all.
From investing in yourself to compounding interest to mini-retirements, here are some reasons why saving for retirement can make you better prepared for an easier, more fulfilling life.
  • Job Uncertainty. Saving for retirement means paying Future You a living wage, and not worrying (like 30 percent of adults) about being laid off or having your wages reduced because you're prepared.
  • Invest in Yourself First. Warren Buffett says the best investment you can make is investing in yourself. Planning for retirement is planning for your future self. Are you going to argue with the Oracle of Omaha?
  • The Life You Want. By thinking about how you want to live, you can figure out what kinds of savings you'll need to have at the point you stop working full-time.
  • Let Calculators Calculate. This list of calculators will make number crunching simple, for everything from compounding interest to retirement funds.
  • Don't Think Decades, Think Days. Investing a dollar a day, or $30 a month, can have impressive returns. Starting at 18, and being consistent, can set you up for a stress-free retirement.
  • Go the Roth IRA route. If you're under 18, your parents can co-sign, and you're off for the retirement races. Starting at 19 instead of 25 can lead to a difference of over $300,000 when you retire.
  • The earlier you start, the less it takes (percentage-wise). Wait until you're 40, and you might have to save 14 percent of your income to save as much as you want. Start at 25, save just six percent.
  • Learn from others. Two websites, Mr Money Mustache and Early Retirement Extreme, take retirement saving to the limits. With that, they offer helpful lessons and reader stories so you can see how others like yourself are saving for the life they want.
  • Seven years on, One year off. Rethink retirement as that once-in-a-lifetime opportunity. Stefan Sagmeister is famous in the creative and design world for his practice of taking sabbaticals every seven years.
  • Mini-retirements. Tim Ferriss advocates for the idea of using mini-retirements on a regular basis to energize and inspire you. Get into this regular habit and saving will become automatic.
Whether you treat retirement as a when-all-is-said-and-done deal, a spice to sprinkle along your life's journey, or something else entirely, know that by beginning to save now you will have much more control of - and get more enjoyment from - your life.
By Alex Jeffries Copyright 2015 brass Media, Inc.

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