When planning your retirement, the truth is that the sooner you start saving and investing, the better off you will be. And even if you have started saving or have not started, it is important to know that you are not alone, and there are steps you can take to increase your retirement savings. “It’s never too late to start
Here’s a list of ways to start saving for retirement
Focus and start today
- Start saving and investing as much as possible, and let compound interest — the ability of your assets, to generate profits that are reinvested to generate their own income, Opportunity to work in your favor. “The more you can invest when you are young, the better you will be.
Stash extra funds
- The extra money? Do not just give it up. Every time you receive an increase, you increase the percentage of your contribution. Spend at least half of the new money on your pension plan.
Set a goal
- Knowing how much you need will not only make the savings and investment process easier, but it can also make it more rewarding.
Some good investments for retirement
Many people spend decades in retirement. That’s certainly good news, but it also presents the challenge of making your savings last throughout a long lifespan.
Listed below are investments for retirees that could help you earn a decent return without taking on too much risk.
Real estate investment trusts
- Real estate investment trusts invest in mortgages or direct equity positions in various real estate. You pay dividends to your investors, and this return is usually higher than what you can get in stock dividends. REITs are good investments when the general stock market is in a downturn. This is because REITs do not correlate with the stock exchanges, which means they will not decline with the rest of the market.
Shares of dividends.
- Many well-established companies pay dividends on their shares that are higher than what you can get in safe investments, such as certificates of deposit and US Treasury securities. Of course, as equities, they are not as secure as fixed income securities, but have potential for capital gains.
Peer to peer lending.
- Peer to peer lending, better known as P2P, has grown steadily since its inception in 2005. Peer-to-peer lending is online and allows borrowers and investors to obtain loans that benefit both parties. It is essentially a question of lending without resorting to a bank as intermediary. The two largest P2P loan platforms are Lending Club and Prosper. Many P2P investments pay a higher interest rate than you will likely get for your stock investments. However, the risk (and reward) can vary greatly depending on who you lend money to.
- Municipal bonds are debt instruments issued by governments, counties and municipalities and their various agencies. The main advantage is that the interest you earn is tax-free. You can also be exempt from state and local taxes if you live in the state where municipal bonds are issued.
- Annuities are investment contracts between you and an insurance company. They come in different forms and usually include a guaranteed return at a given rate. Pensions may be fixed or variable, and the return may depend on the performance of the stock market. However, a pension contract may include a provision that limits your downside risk in the event of a market downturn.
Banknotes and US Treasury bonds. Return in the United States
- Treasury bills and bonds are much higher than you can get on deposit certificates and money market funds. This is because both bonds and bonds are longer-term securities that pay higher interest rates. For example, Treasury bills, which are US government bonds with maturities of two to ten years, currently pay close to 2% per annum.
Treasury inflation protected securities.
- Treasury inflation protected securities, better known as TIPS, are another form of US government bonds. What differentiates them from other treasury securities is that they pay interest and extra capital to make up for inflation.
How much you need to save to retire
There are some questions you can ask yourself to determine your optimal “number which is listed below
What will your living expenses be?
- The first step is to determine how much you spend now. Start by creating a budget to track your spending. A general rule of thumb is that you need 70 to 80% of your pre-retirement income after completing your job. But some financial planners now suggest that this may not be enough.
Will your savings generate enough money?
- One cannot know what will happen to interest rates – and inflation – in the coming years. But for a retiree to generate $ 40,000 a year after cessation, he will need savings of about $ 1.18 million to finance a 30-year retirement; According to Morningstar, a Chicago-based investment research firm, this was calculated with average returns of 6% and inflation of 2.5%.
What if I did not save enough?
- The worst thing you can do is lift your hands when the number seems out of reach, first: save, savers can double their eggs on average over the last decade of their working lives thanks to the compound interest magic. Remember to switch from two cars to one, or reduce your travel so as not to spend too much. If the market offers a typical annual growth rate of 7% per year, “your money will double every ten years.