One of the best things you can do for yourself is to be ready for the future. While there is no way to predict what the future holds, or completely prepare against every eventuality, you still need to do your best to prepare your finances against what might be difficulties that could sink your finances. Creating an emergency fund is one way to do that. Another way is to prepare for retirement.
What are You Doing for Your Future?
Even though many of us expect to work past what people consider a “normal” retirement age, the fact is that at some point you are likely to stop working. When that happens, you will need money to live on. Whether you retirement early, or retire late, proper preparation is in order. And you will be better off, and have a bigger nest egg to rely on, if you start saving for retirement right now.
What you do now can have a profound impact on your ability to meet your bills and other obligations during retirement, as well as your ability to do what you want. Your first step, whether your dream is to sit on the porch all day, or whether you want to travel the world, is building up a retirement fund.
Tax-Advantaged Retirement Accounts
If you want to maximize your ability to build your nest egg, you need to take advantage of the tools offered to you. Tax-advantaged retirement accounts like IRAs and 401(k)s can help you boost your ability to save. The tax advantages allow you to put more of your money to work for you. With traditional versions of these accounts, you receive a tax deduction when you make a contribution. When you withdraw money later, though, you will have to pay taxes on your income.
However, there are also Roth versions that allow you to skip the tax deduction, paying taxes now, and then avoid paying taxes on your withdrawals. This can be a great way to avoid paying higher taxes later, and reduce your worries about how much you owe. If you qualify, a Roth IRA or a Roth 401(k) can be a great addition to your retirement arsenal.
For best results, you need to start investing in your retirement accounts as early as you can, and show consistency. Make sure that you contribute the same amount to your accounts each month. Make it automatic to ensure that it happens regularly. When you are consistent, your portfolio grows at a regular rate, and you can also take advantages of times when asset prices drop by adding more shares to your portfolio. Later, as long as prices rise, you will have received more bang for your buck.
Regular investment is key if you want to be able to retire in comfort. Figure out how much you need to invest in order to achieve the results you want, and then make a consistent plan and stick to it. You might need to make adjustments as you go along, but the key is in consistent investment, and starting early.