Today, more and more employers don’t offer traditional pensions to their employees. In the past, it allowed employees to retire early and provided them with more guaranteed income. But even if your employer offers a retirement plan, that program might not be sufficient to cover your monthly expenses. Look for other means if you want to enjoy a financially stable retirement. Make sure to carefully plan if you’re going for that dream.
Below are eight tips that will help you secure a financially stable retirement.
Maximize the Plan Offered by the Employer
In building your financially secured retirement, start with contributing to your workplace retirement plans. Make sure to set aside the least amount your company allows. Then, you can try increasing your contributions by 1% every year if you reach the employer match. Other employers will allow their employees to deduct the contributions from their salaries automatically, so they don’t have to worry about it themselves.
You can talk to the HR department to determine if your company offers a retirement or contribution plan and if you can automatically increase your contribution amounts. If the ones provided by your employer don’t fit your needs, check out the other options you can get. You can opt for SEP, Roth IRA, IRA, or more for retirement.
Talk to a seasoned financial advisor if you can’t still figure out which one suits you.
Determine What Your Needs Are for Security
Most people think that they only live once, so they end up spending their money on items that might not benefit them in the future. Nothing is wrong with that mindset, but it’ll be helpful to plan carefully. In making financial decisions, try to assess which option best fits your current situation. If you can’t find the right choice, try to compromise.
For example, retirement is one of your priorities, but you enjoy traveling. You can go on a vacation every two years, instead of going on one annually.
Make It Your Habit to Settle and Avoid Debts
Opening a new, long-term loan or debt will only affect your assets, which you could have set aside for your early retirement. Likewise, you’re only spending more by having to pay more for interests, which are an avoidable and unnecessary part of applying for a loan. It’ll only keep on increasing if you can’t settle your debt or loan.
Use Healthcare Plans for Medical Expenses
Medical expenses are one of the major concerns people worry about when planning for their early retirement. Most people overlook using a health savings account. You can get this plan together with high-deductible healthcare plans. That allows you to contribute, invest, and access the money for eligible expenses tax-free.
One of the best uses for this plan is when you need an at-home health aide due to your injuries or medical condition. You don’t have to worry because your contributions will carry on even if you transfer to another company.
If you can’t avoid making a partial withdrawal from your account while you’re still working, you can use the remaining amount for eligible health needs. It’s another option that you’ll have to consult with a financial advisor before getting one.
Find Multiple Sources of Income and Assets
It’ll also help look for different income sources, including taking on a part-time job or a rental property. It would be best if you stopped the habit of depleting one source. Making it a habit to alternate your sources of income will help with your daily expenses, allowing you to save more for your retirement goals.
Take Advantage of Your Employee Benefits
Most employers also offer the opportunity to purchase company stocks at a lower price or get a matching contribution from them. Don’t hesitate to ask your HR department about the options you can avail of.
Invest Your Money Early and More Regularly
It’s also a good habit to start investing early and more regularly. If you have the financial resources, invest in a retirement plan that you can use for savings and retirement. You’ll indeed benefit from the investments you’ll get. Before that, it’s best to talk to a financial advisor to determine which plan is the best.
Don’t Access the Retirement Accounts Early
Young professionals who started to invest early might find it difficult to resist the desire to make a partial withdrawal from their investments for a large purchase. But you’ll see more potential for growth if you let your investment stay longer in the market. Bear in mind that withdrawing from your retirement fund can be expensive.
For example, the IRS has a 10% penalty for withdrawals before the age of 60. That’s on top of the regular tax charged on the amount withdrawn.
Young professionals have different meanings for retirement. Others see it as a means to enjoy what they love, spend more time with their loved ones, or live comfortably. You’ll be in a better position if you plan at a young age. Investing in the right financial plan will help you achieve your goal of early retirement.