Contributed by Fresno County Federal Credit Union
Want to retire comfortably — even rich? A little advance planning and self-discipline now can give you a truly ideal nest egg in your golden years.
Here are some simple tips to get you going in the right direction:
Spend less than you earn. Sounds simple, doesn’t it? Far too many people are overextended, and that can lead to a retirement fund shortfall. You should spend only 90% of the money you take home and save the remaining 10%.
Start saving early. Start saving $100 each month at age 20 and (assuming you average a 5.5% Annual Percentage Rate of return) by the time you’re 65 you could have nearly a quarter million dollars for retirement. Wait till age 40 to begin saving the same amount and you’ll have $61,383 in return by age 65.
If you start late, invest more heavily. If you start retirement savings at age 55, you haven’t missed your opportunity to retire rich. People over age 50 are allowed to make catch-up contributions to their retirement funds.
Don’t forget about “free money.” If the company you work for offers a 401(k) employer match, take advantage of it. Your employer is basically giving you money – you will need to invest some of your own cash into the retirement fund too.
Get a leg up. Increase your income and increase the amount of money you are saving for retirement. Does your job have some form of credentialing to give you a raise or a transfer to a higher-paying position? Are you eligible for government-funded workforce training programs? Can you return to college to earn a degree or upgrade your skills?
Pay Off Your Debt – List all your debts and make a plan to pay them off. There are two commonly used approaches to paying off debt. The first is to list all your debts smallest to largest regardless of interest rate. This method is motivating as you continue to see active progress in paying off individual debts. The second approach is to pay your debts, starting with the highest interest rate debt first. This makes the most mathematical sense as you’ll be saving more in interest over time. Pick the method that works best for you. Once debt is paid off, use those funds to save for retirement.
Watch your investments. Research available investments, weigh your options and listen to professional advice.
Work a little longer. You can file for Social Security benefits as early as age 62, but you could get even more money if you wait until you’re 70.
Determine your future Social Security benefits. You can estimate your social security benefits by using the retirement estimator on the Social Security Administration web site at http://www.socialsecurity.gov.
Talk to the experts. Fresno County Federal Credit Union members receive the benefit of unbiased professional advice at no cost or obligation from financial professionals. They offer access to a wide range of financial products and services and can help you build a diversified portfolio of well-managed investments.
For more information about Fresno County Federal Credit Union’s financial planning services, visit online at www.FresnoCU.com.