Social security was established to help supplement ones’ own saving strategy. It was never intended to be the only source of retirement but to help prevent one from living below the poverty line. It is still imperative for you to save and invest in other plans such as your employer’s retirement offering or your own Individual Retirement Account (IRA). Take advantage of the tax incentives behind utilizing retirement plans.
Save early
If you start putting away money for retirement by the age of 25 and consistently save from this point on, you will not have to worry about saving as aggressively once you get older. This strategy is simple math; the longer you have to save, the less you will need to save each year.
Avoid withdrawals from your retirement account
Once you have built a respectable 401(k), it can be tempting to rely on those funds for unexpected expenses or other investments such as a house. When you withdraw money from a retirement account early, however, you will be surrendering a significant portion to cover the taxes and fees of early withdrawals. Seeking loans or tapping into other forms of savings will ultimately cost you much less over time and keep your retirement funds working for you.
Adjust your savings strategy with your age
Your retirement savings strategy should not be consistent from age 25 to age 65. When you are younger, you might invest in higher-risk ventures, but your investment portfolio should evolve with safer investments as you approach your actual retirement age. Furthermore, you might be able to give your retirement savings a late boost by putting more money in savings once your kids are independent and out of school. Thinking ahead with strategies to save for your child’s education will also help to curb the burden of college expenses.
To explore the right investment strategies to get you to a comfortable retirement, contact Financial Directions, LLC at (520) 408-7777. Our Tucson-based independent advisory firm will provide the individualized attention you need to make the best investments and financial choices for your needs.
