10 Retirement Investing Secrets to Ensure You’ll Have Enough Money
Do you rely on your stocks as your retirement fund? You shouldn’t be worried about money. Here are 10 retirement investing secrets for a worry-free future.
21% of the American working population have nothing saved for retirement. Most people who read that figure are absolutely floored.
After all, if some 68 million people have nothing saved for retirement, what are they going to do? Are they going to work until they die? What is supporting those that can’t work going to mean as far as taxes go?
While we can’t answer a lot of those questions, there is one important question that we can answer for you…
“How can you avoid becoming one of those people?”
Below, our team has put together a list of our top 10 retirement investing secrets that will put you in an outstanding position to retire once the time comes!
- Start Saving for Retirement Immediately
There’s no time like the present to start saving up for your retirement. That means, when you get your first job, you’ll want to be putting away portions of your earnings into your company’s 401K plan or an IRA/ROTH IRA.
The longer your money has to grow through the power of compound interest, the richer you’ll find yourself when retirement comes around!
- Don’t Skip Contributions
We get it… Putting 10% of your paycheck towards that new flat screen TV sounds a heck of a lot better than putting 10% of your paycheck towards a retirement account.
Still, we promise you that when retirement comes around and your flat screen TV is long gone, you’ll have wished that you had forgone the fancy electronics and put money towards your future.
Always invest a little bit of your paycheck into your retirement account each month.
- See If Your Employer Will Match You
A lot of the top companies in the world will match your retirement contributions. They do this to attract top talent into their ranks.
If your employer doesn’t advertise retirement matching, ask your HR department if there’s an unadvertised matching program available. If there isn’t, request that HR consider making the request to start one.
- Boost Your Contributions When You Can
If your life circumstances change and you’re suddenly coming away with more money at the end of each month, instead of upgrading your lifestyle, consider upgrading your retirement contributions.
For example, let’s say you’ve paid off your car and now aren’t pouring $200 a month into its payment. Move all or a portion of that money into your retirement account each month.
- Learn About the Tax Benefits of Retirement Savings
Did you know that any money you put into your 401K or IRA is non-taxable income?
It’s true! If you make $50,000 per year but put $10,000 into your 401K, you technically only made $40,000 that year.
That can have awesome implications on which tax bracket you fall into and how much you need to pay in taxes.
- Don’t Withdraw Early
It can be tempting to get your hands on that retirement investing money you’ve been saving up. Fight the urge.
If you withdraw from your retirement account for the wrong reasons too early, you could face hefty penalties which can result in the loss of a significant portion of your retirement savings.
- Learn About Expense Ratios
When you invest in products that are managed by 3rd parties (mutual funds for example) the person who is actively managing your portfolio takes a portion of your earnings as their fee. While expense ratios are a natural part of hands-off investing, some firms charge a lot more than others.
Vanguard is an investment firm that’s well regarded and is known to have the lowest expense ratios in the industry!
- Stay Cognizant of Inflation
Whatever you invest in for retirement, you’ll want to make sure that the returns you’re getting are outpacing inflation.
For the uninitiated inflation is a term used to describe the always rising cost of goods and services. If your retirement savings is growing at a rate that’s pacing behind the rate of inflation, you’re not really making money.
The best way to combat inflation with your recruitment portfolio is to keep your investments diversified and ensure you’re taking calculated risks.
- Reduce Your Portfolio’s Risk As You Reach Retirement
The stock market goes up and down during any given year. Why people still love it is because, from a macro perspective, the market always trends upwards.
That being said, if it’s time to retire and you pull out your money during a down year, you could lose thousands.
To mitigate the risk of that happening, be sure that your investment manager is reducing the risk of your retirement portfolio as you get close to retirement age.
- Understand the Value of a Dollar
Every dollar you spend on yourself today could have been worth multiple times its current value if you had put it into your retirement account.
For example, if you’re spending $8.00 5 days a week eating out for lunch, that’s almost $2000 per year. If you had instead brought lunch from home and invested those $2000.00 per year in your retirement, at a modest 7% average return over 50 years your total $100,000 investment would have turned into $869,971.00.
That simple example shows you the power of investing in your retirement and why you can’t afford to miss out.
Wrapping Up Retirement Investing Secrets to Ensure You’ll Have Enough Money
We’ve just outlined 10 retirement investing secrets that we believe will skyrocket your wealth and secure your life post-employment. Take our tips to heart and we promise you that your life will look vastly different 20-45 years from now.
Want more of the best information you can find on money online? If so, check out additional “get rich” content on More Than Finances today!
Like More Than Finances?
Subscribe for regular updates via email.