Everybody wants the kind of stress-free retirement that involves rest, relaxation, and new adventures. However, that involves some level of financial independence. Your dream retirement depends on how smartly you save, invest, and financially plan for your future. Here are four ways to meet your retirement goals and build an adequate nest egg to truly enjoy your golden years.
Write Down Your Retirement Goals
When do you want to retire? What income sources will you use after you leave the workplace? Would you like to travel more? Take up a new hobby? How much time do you have to save? Writing a detailed personal retirement plan is the first step in this process and will set the stage for the next step.
Take Stock of Your Savings
Keep updating your list as the years go by. Use an online retirement calculator to assess how much you need to be saving. This calculator will use information like bank statements and contributions to your retirement fund to help you figure out how much you need to be saving. Work toward having 80 percent of your current income after you retire. Once you have this number, you can start working on bulking up your savings.
Save Smart
The key to saving for retirement is to choose an account and retirement savings plan that actually helps your money grow. This account will depend on how you currently make a living right now. If you’re a salaried employee, employer-sponsored retirement plans like the 401(k) come with tax advantages. If you don’t have a 401(k), find out if you qualify for an Individual Retirement Account (IRA) or a Health Savings Account. Self-employed people can set up a self-employed retirement plan that also comes with considerable tax benefits.
Keep Reviewing Your Investments
Thanks to inflation risk, you won’t be able to hit your retirement target with just the savings in your retirement account. Inflation can reduce the purchasing power of the dollar over time. Allocate your assets to different investment types. Decide the level of risk you’re willing to undergo or whether you prefer a hands-on or hands-off approach to investing. Keep a close eye on your investments as you get close to retirement.