Many Americans have major concerns that they will be able to achieve the retirement of their dreams. While it may be more difficult than it was a couple of decades ago, experiencing a great retirement can still be a reality for young adults. Here are some ways to make it happen.
Start Saving Early
The key to having a great retirement is having sufficient funds available to pay for it. This could mean having a great pension as a parachute. However, most people don't have this luxury. This means that they'll need to start saving as soon as possible. People who start saving in their twenties or thirties will be able to see their stash of cash grow because of compounding. It's simple. The earlier a person starts, the more time her money has to grow.
Minimize Expenses Today
Another step toward achieving an amazing retirement is through cutting expenses. Those who need less money today to live a fulfilling life will likely need less money in retirement to enjoy their golden years. Every dollar that's left over after expenses is a dollar that can go toward saving for retirement.
Estimate How Much You Need
To have an idea of how you're going to get to where you want to be in terms of retirement, you have to have a map that will track the steps that are necessary to get there. This is where the planning rubber meets the road. Figuring the amount that you'll need for an amazing retirement will involve figuring out how much you can expect to pay for a mortgage or rent, transportation, and food. Additionally, if you're looking to travel or spend time in a tropical location, it's a good idea to figure this into your retirement budget.
Consider Geographic Arbitrage
If you're really ambitious and open to adventure, it's possible to retire abroad, or at least in a cheaper locale within the US, to cut down on the amount needed to finance retirement. When retiring abroad, it's important to remember that immigration processes can be difficult and costly. However, the living expenses after these initial costs can be quite a bit cheaper over time, especially in countries where the dollar is strong.
Invest Aggressively
Investing in CDs will not work in a low-interest environment. This means that you'll want to keep quite a bit of your nest egg in growth investments like stocks or mutual funds so that you avoid losing money to inflation. Additionally, it's important to remember that you will want to avoid drawing down too much money, especially early in your retirement years. Most advisors recommend withdrawing between 3 and 4 percent annually to avoid running out of money.
Saving money early and then living off of investments is a great strategy to see that you're able to retire comfortably. Being willing to move to a cheaper part of the world might even mean that you can live on a tropical beach in your golden years. The time to start the planning process is now.
If you have questions about retirement and what you need to do to prepare, don’t hesitate to contact us today!
References:
American Funds | Starting Early to Save for Retirement Is Important
Kiplinger | Retirement Savings Calculator
Dave Ramsey | How to Invest in the Right Mix of Mutual Funds
Freedom Law | Immigration Law
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