Preparing for Retirement the Right Way

It’s never too early to start investing in your future. Nowadays, simply opening up a savings account isn’t enough to get yourself on the right track for retirement. Plus, you don’t want to play catch up in your later years. There are plenty of tools at your disposal to help you start preparing for your retirement. So even if it’s decades away, here are a few things you can do to make sure you’re ahead of the curve.

Investment apps

Even if you’re not in a position to hire a financial advisor to help you conduct basic stocks and bond investments as well as initial trades, it doesn’t mean you’re excluded. Nowadays, it’s never been easier to make simple investments directly from your smartphone. Numerous investment applications are available through your app store that are dedicated to helping you set up an effective investment portfolio. These range from beginner-friendly apps to more advanced investment options.

One of the most popular investment applications is Acorns. It’s so easy to use that you can download it, set up a profile, and transfer a starting fund into your account within minutes. Acorns asks you a bit about your investment preferences, your overall goals, and how much you’d like to contribute on a recurring basis. Then, the app invests on your behalf in low-risk stocks and bonds to ensure steady growth.

If you connect your credit and debit cards, you can opt-in to Acorns’ roundups feature which rounds your purchases up to the nearest dollar and automatically invests it. You can also add multipliers to your roundups for further benefits. Think of it as a digital change jar.

Employee incentives

Depending on your profession, you’ve no doubt heard of your company’s retirement policy. Many salaried professionals enjoy the benefits of employer-sponsored 401k plans. If you’re one of the lucky ones, you also receive the boon of employer match contributions. That means whatever amount of your paycheck you contribute to your 401k, your employer matches, typically up to a certain percentage. It’s an excellent way to speed up the savings process and is an excellent reward for company loyalty.

Even if your employer doesn’t sponsor any sort of retirement program in-house, you can take advantage of services like payroll deduction IRAs that are an excellent alternative to a company 401k. It works in a similar way. You’ll select a certain percentage of your paycheck to contribute each period, typically with a standard growth rate. Yet, unlike a 401k, an IRA isn’t dependent upon your employment to work, though some offer incentives for using your paycheck as your primary source of contribution.

Erase your debt

This is typically one of the hardest tasks on the list, especially for recent graduates combatting student loan debts. However, it’s also perhaps the most important factor in retirement planning. It’s fairly difficult to save money and pay off debts at the same time so typically, your best bet is to tackle the debt first. That way, you’re only expending a portion of your income to future planning and aren’t spreading your resources too thin.

Set up a budget spreadsheet so you’re able to see all of your monthly costs in one place. This includes minimum payments for credit cards and student loans as well. Tally your total monthly income after tax and subtract your expenses from that total. Once you know how much money you have left each month, you can apply the additional funds towards speeding up the debt reduction process. Even if you can’t afford more than a minimum payment it’s important to stay consistent. Falling behind leads to late fees, heavier interest rates, and penalties. It also extends the duration of your debt.

An early start

The sooner you start planning, the more comfortable you’re likely to be in retirement. It’s not the easiest process and it definitely often feels like an uphill battle, but it can be done. Don’t fault yourself for the occasional financial misstep; mistakes happen. However, as long as you’re devoting your time and energy to eradicating debt and researching your ideal retirement vehicle, you’ll be well on your way to a stronger financial future.