Making the Most of Your Retirement the Smart way.
Whether you just graduated college and are entering the workforce or you’re nearly done with your working years, growing your nest egg should be a top priority. To enjoy your golden years of retirement, you want to be able to live comfortably without having to stress over your finances. Making sacrifices to grow your savings account, 401k, or Roth IRA will allow to you live the life you’ve imagined. In order to make the most of your retirement savings, consider these essential tips below!
Postpone Social Security.
Once you reach the age of 62, you’re eligible to begin collecting Social Security payments. However, the longer you postpone collecting these payments, up to age 70, the more money you’ll make in the long run. If you’ve saved enough money, or decide to continue to work after your full retirement age, delaying your Social Security is a smart way to bring in larger paychecks each month.
For example, if you were born in 1955, your full retirement age is 66 and 2 months. At this age, you can collect 100% of your retirement benefit. However, if you wait just one year, you can collect 108% of your retirement benefit. So, be patient and hold out on collecting your Social Security benefits for maximum returns!
Get a Reverse Mortgage.
Whether you live in a luxurious home or lived in the same ranch your entire life, many seniors prefer to stay in their homes forever. As you near retirement age, the last thing you want to do is box up all your memories and deal with the stresses of moving. If you’re retired and need to increase your cash flow, getting a reverse mortgage can help avoid the hassle of moving by giving you the funds you need to stay in your home.
If you’re unsure how a reverse mortgage works, we’re here to help. Contrary to a conventional mortgage where you pay off a loan and build equity, a reverse mortgage does the opposite. Once you reach the age of 62, you’re able to apply for a reverse mortgage.
With a reverse mortgage, the bank will be giving you monthly payments instead of you paying a monthly loan amount, increasing your cash flow. The only thing you’ll be responsible for is paying taxes and insurance on your property, allowing you to enjoy your retirement years without financial burden!
Contribute to Your 401k.
The key to a happy retirement is to begin saving early. While many millennials and Gen Z-ers are stuck in entry-level jobs with mounds of student loan debt, trying to set aside even a small amount of income into a 401k account will pay off in the long run. While it may be tempting to buy that brand new watch you’ve had your eye on after getting a raise or promotion, shopping consciously and resisting temptation will allow you to grow your savings account and live comfortably later down the road. Additionally, take advantage of your employer’s 401k match. Many companies will match your 401k contribution, up to 5%-6% of your income, which is practically free money!
If you’re having trouble getting your finances straight, automate your savings by having portions of your paycheck go directly to your 401k. This way, you won’t have to think about it when it comes time to transfer funds. Additionally, setting a budget can be made easy with budgeting apps, so you can afford to treat yourself once in a while to luxury goods.
Finally, don’t withdraw early from your 401k before the age of 60, as you’ll have to pay a penalty fee if you do so. You’ll also miss your tax-deferred investment growth as well. So, instead of thinking of your 401k as a savings account, set up a separate emergency fund with at least 3-4 months of expenses built into it to avoid any financial stresses.
Invest in the Stock Market.
Many believe that the stock market is volatile and a risky investment, which is sometimes true. However, this is mostly true for short-term investments. If you begin investing in stocks early in life, you can see around 10 percent growth over 30-40 years. In the modern age we live in today, investing is more convenient than ever with hundreds of investment apps available to you that make it quick and easy. Or, if you’re unsure how to navigate the stock market, consider consulting with a professional stockbroker who can give you sound financial advice. Who knows, maybe you’ll invest in the next big product and come out with wads of cash!
The Bottom Line.
Consciously managing your finances from the day you start working to the day you retire is extremely important. If you want to spend your golden years traveling the world and staying at beautiful resorts, you need to grow a hefty nest egg. Start saving early and put as much hard-earned cash into your emergency fund, 401k, and the stock market to live the life you deserve!