Investing

Investing Into Your Retirement

Saving for your retirement is no easy task. Most of us are tight on budgets and are on a roll trying to pay our debt down. In this blog, I want to talk about how crucial it is to save for your retirement. The reason I want to talk about this is because I have met people who still works at their 70s. And, it was not because they try to have some activities, or bored at home, but it was more because of monetary problems.

The majority of people relies on social security payment. There is nothing wrong with this. But, I have always been in the conservative side of mind. What if the amount of social security check you receive is not enough? Have you ever ask yourself this question? Are you prepared for it?

I personally have about 30 years before I retire. Just by looking at how our government is being run in the past couple decades, and how global trade affects our economy, I am a little bit worried that by the time I retire, there will be no such thing as social security. I may have gone a little overboard on this, but anything can happen. So, why not prepare for the worst?

There are a few points that I want to share in this post to maximize your contribution:

Take Advantage Of Your Employer’s Contribution Matching

I have worked for several companies that match my 401k contributions. And surprisingly, not many people take advantage of this. The number one reason “I can’t afford contributing to 401k”. Wow!. This statement really struck me. These people are leaving free money on the sidelines.

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I understand that most people live on paycheck to paycheck. Here is what I noticed though. The majority of the people who says “I can’t afford contributing to 401k” are not managing their financials well. They have budgets, but they would spend on things that they should not have. They do stay within their budget (i.e. their paycheck). They have no debts, but they spend every penny. With this in mind, I am pretty sure they will be in for a major surprise when they retire. Their social security check won’t be the same as their take home pay.

Check with your employer and see if they match any of your contributions. If they do, check with them what are the rules. Some companies will match 75% of your contribution. Meaning, if you put $100 into 401k, they will add $75 to your 401k account. The way I see it, you are getting 75% return on your money right of the bat. No where in the world you will get this kind of return of investment.

Open A Roth IRA or Roth 401k Account If You Can Contribute Extra

The best thing about these two accounts are non-taxable. Any gains that you make during the lifetime of the account will not be taxed when you withdraw at retirement. Although the contribution limit on these two accounts are a lot lower than the regular accounts, the tax benefit definitely a no-brainer.

Setup A Budget For Your Retirement

This is what I personally do. When I contribute to my 401k, my take home paycheck is already include the deductions. I also setup a budget for my Roth IRA account. When I contribute to it, I consider it as an ‘expense’ in my budget.

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Go ahead and review your budgets one more time. Do you think you can make some adjustments? sacrifices for the future?

Again, if your employer matches your contribution at ANY rate, do not pass on the opportunity for a free money for your retirement. It adds up quick and you won’t even think about it. It will be a nice surprise at the end. Even if it does not amount to much at all, it is still a nice addition to the social security check that you will receive at retirement.

Let me know what your thoughts and strategy on retirements. I’d love to learn new ideas. Drop me a line below in the comment section. Thanks!

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