7 Pieces of Retirement Advice to Implement Now

Retirement is ever-looming in the distance, but that golden date may not be as far away as it seems. Preparing as early as possible is the wisest decision to ensure your retirement is as comfortable financially as you prefer. Whether you start investing, cut your expenses, or otherwise, every little step gets you closer to your goals. Check out some pieces of advice to implement right now to get prepared for your retirement.

1. Manage debt, track spending, and budget

Debt management and spending tracking are the first steps to getting started with saving for retirement. Be careful about over-borrowing, and watch out for high-interest loans or lines of credit. No matter your age, high-interest loans eat away at your amount of cash flow by the month.

Also, start tracking your spending. Get to know where your money goes every month, and create a budget that helps you stay within predefined limits. Tracking spending and budgeting forces you to review outgoing expenses and make more conscious decisions. A lot of people know their income but don’t know exactly where all their money goes.

2. Reduce expenses for more potential savings

Once you know your personal cash flow better, you’re equipped to make cutbacks. Reducing expenses allows you more money to allocate toward retirement savings. Most people have areas of their finances where they could reduce expenses and still live well. A few ideas may include:

• Conserving electricity to lower power bills
• Canceling a landline phone service that never gets used
• Consolidating high-interest credit card debt
• Shopping around for cheaper auto insurance
• Evaluating and reducing your subscriptions

Sometimes, major expenses can be adjusted to free up funds for retirement. For example, downsizing from a large home when your children are grown could mean equity in your pocket for retirement investment. Plus, a smaller home is cheaper to maintain, heat, and own.

3. Look at non-traditional investments for retirement

Whether you already have a 401k or an IRA, alternative investments are worth consideration. Alternative investments go beyond the standard stocks and bonds. Plus, they are not so heavily influenced or tied to standard markets. Therefore, these investments beef up an existing portfolio with attractive earning potential.

A few of the most common types of alternative investments include:

• Real estate
• Cryptocurrency
• Hedge funds
• Venture capital
• Commodities

Alternative investments are more accessible now than ever thanks to the availability of easy-access platforms. Many are accessible to the general population, even if an individual doesn’t have a lot of money to invest. For example, you can invest in real estate investment trusts (REITs), which function a lot like mutual funds. Remember, anyone age 65 or older should opt for the 1040 SR tax form to report sources of income (even passive one).

4. Take advantage of free money with employer-matched 401ks

If your employer matches your 401k contributions, jump on the opportunity to nab this free money. The latest estimates claim that about 98 percent of employers offer some matching or bonus with contributions to a 401k. Even if you’re not fully vested in the company yet, these bonuses can amplify your gains faster than what you would achieve on your own. If you intend to stay with the company until vested, this gives you an excellent opportunity to build the account.

It is also important to examine your 401k to make sure it has the greatest earning potential. For example, you should know the savings rate, fees involved, and what happens with a rollover.

5. Bump up retirement contributions the more you earn

The general retirement savings goal should be between 10 and 15 percent of your annual income. Of course, every personal financial situation is different. Some people will be able to contribute more, while others may not be able to allocate as much. When you get a salary increase, revisit your savings plans and determine if you can make an adjustment.

Some financial advisers recommend automatically bumping up contributions to retirement by one percent every year as the retirement age gets closer. In any case, however, it is best to follow the simple rule that you contribute more with higher earnings.

6. Consider opting for an HSA

Safeguarding your health is ever-important, but even the most health-conscious person experiences unexpected illnesses. Unfortunately, running into healthcare expenses you don’t anticipate can really hinder your retirement plans. It is never too early to consider setting up an HSA (health savings account).

HSAs may be offered through your employer, your bank, or even your insurer if you have a high-deductible health plan. The beauty of an HSA is the tax advantages. Investments in an HSA account are tax-deferred, and you don’t have to pay taxes when you withdraw your funds.

7. Make financial plans for retirement and revisit them often

You are never too young to get started on retirement plans. The earlier you get started, the more likely you will have what you need. Consider what a comfortable retirement looks like to you. Think about how much money you believe you will need to sustain yourself when you’re no longer employed. Set goals as far as debt, assets, and savings.

Lastly, don’t forget to revisit your retirement plans often. Changes happen throughout life that affect your financial future. For example, if you move, the cost of living changes, so what you’ll need for retirement may change as well. Revisit your retirement plan every few years, and do so more often the older you get.

Retirement: It’s Always Closer Than Expected

Without a doubt, time flies. You may be working hard right now, but years slide right by, and chances to plan for retirement slip away. Whether you are facing retirement in 10 years or 20, the age for stepping out of the workforce happens quickly. If you want to enjoy your time without struggling to make ends meet, retirement planning is the key. Some of the smallest moves right now can make all the difference in what your future financial state looks like.