Growing up, I would always hear my elders talk about their “jubilacion.” They would constantly discuss plans for their retirement — all the time. It was as if the goal was to work until they didn’t have to work anymore.
But now that I’m older, I realize these were empty plans. They had all these dreams and aspirations but did not do anything to accomplish a comfortable retirement due to a lack of knowledge and financial literacy.
And, not to mention the fact that our parents expect their children to be their retirement plan.
While there is nothing wrong with wanting to help your parents in their older age, this should only be out of your own choice, not because it is expected of you.
Here are some things you can start doing to help you plan for the future.
Sign up for Your Company’s 401(k) plan
When you begin a new job, you often receive a “benefits package” from your employer. This can include health insurance, dental insurance, short-term disability, or a 401(k) plan. Many of us quickly set aside the 401(k) plan as we are more concerned about our health and the present rather than the future. And really, who thinks about their retirement during their 20s?
With the high cost of living and struggling to make ends meet, it may not always seem feasible to have additional deductions from your paychecks. We already have tax deductions, health insurance deductions, and social security deductions — the list is endless.
However, it is essential to discuss all your options with your employer. The deduction can often be as little as how much it would cost you to eat at a restaurant on a night out. Even more, your company may contribute additional funds to your savings plan.
Set up a Savings Account
Of course, once you retire, you can’t count on the income you were accustomed to receiving after working your whole adult life.
A great way to start planning for the moment you no longer work is to start saving. We understand it can be difficult to save while you have so many financial responsibilities, but every little bit helps.
You can sign up for a high-yield savings account, which “pays a higher yield on your money”, according to Bankrate. While it can be convenient to use the savings account linked to your checking account, a high-yield savings account provides the benefit of earning higher interest rates. This way, your savings will start to increase at a faster pace.
Another account you can consider is a Roth IRA, a “tax-advantaged individual retirement account to which you can contribute after-tax dollars.” This is extremely convenient as you would not have to pay taxes once you start withdrawing money from the account.
While setting up a savings account is an important part of planning for retirement, it is also important to invest. Leaving all of your money sitting in a savings account is not exactly the best tactic. You should refrain from putting all your eggs in one basket, as you are not sure how inflation or the economy will be when you do decide to retire.
This is why investing is an excellent tool for planning your retirement. For example, if you invest in real estate, you will continue to earn money from your properties, thus duplicating your earnings. Investing is an excellent way of using your money to further increase your capital, which will come in handy during retirement.
It is never too late to start planning your retirement, so don’t be afraid to take that first step today.