When you’re young, retirement may seem like a lifetime away. However, the key to successfully funding your golden years is to start taking action as early as possible. Beginning to plan when you’re still in your twenties or thirties will allow you to benefit from decades of compounded growth, low life insurance rates, employer contributions, and reduced tax obligations. Here are a few tips for getting a head start on your retirement planning.
A Beginner’s Guide to Saving for Retirement
1. Put Money Aside Now
Regardless of how much you’re able to save out of your income to put towards retirement, you should do it. Even a small amount is better than nothing, and over time, you can gradually increase what you’re setting aside. Taking incremental steps will add up over 30 to 40 years. Set a budget that includes retirement savings and resist frivolous spending as best you can.
2. Sign Up for Your Employer’s 401(k) or a Roth IRA
If you work for a company that offers 401(k) benefits and you’re eligible to participate, don’t hesitate to take advantage. Employers will typically match your contributions, which means you’re saving double the amount you sign up for. If this isn’t an option, consider contributing to a Roth IRA account. When it’s time for you to take the money out during retirement, it will be tax-free.
3. Purchase Life Insurance
Some life insurance policies have a cash component that allows the owner to take money out from their account while they are still alive. This means you will have extra money waiting for you when it’s time to retire or to provide for your loved ones in the event something unfortunate occurs. Even if you don’t have any dependents yet, the best time to buy life insurance is when you’re young and healthy, as this is when you’re able to lock in the least expensive premium.
4. Invest in Stocks
A large percentage of your investment portfolio should be in stocks. When you’re young, you have years ahead of you to invest, so you won’t be too affected by the ups and downs of the market. A well-diversified portfolio may include a combination of mutual funds, a target-date fund, and exchange-traded funds.
The steps you take to save for your retirement now will make all the difference in your future quality of life. If you are interested in learning about your life insurance options, contact the team at Sweeney Insurance Agency, who will help you find the right policy for your situation. As an independent agency serving Kodiak, AK, for more than 40 years, they offer clients high-quality products at competitive pricing. Call (907) 486-3101 to schedule an appointment or visit their website to request a life insurance quote.