If you have ever taken the time to talk to retirees about your life, you know that they can have some great stories and sometimes great advice about everything from relationships to money. A recent principal study asked retirees to share some financial advice they wish they could give to their younger brothers, and the top five answers, were listed below.
By following these tips, we can never avoid misuse of money, but if you can stick to them best, you can give yourself a good shot at a comfortable future.
1. Start planning early retirement
About 70% of retirees said they would encourage their younger siblings to start planning for retirement earlier in life: in their 20s if possible. This is not always easy to do, especially for college graduates who have very high student debt. But even though you may spend a few dollars each month, it is worth setting them aside for retirement.
Your early retirement contributions are usually the most valuable because they have more time to grow. If you invested $ 100 today and earned a 7% average annual rate of return, it would be about $ 1,500 after 40 years. This is a profit of $ 1,400. But if you waited five years to invest that $ 100, you would end up with $ 1,068 after just $ 35, less than $ 400.
Even if you have an extra $ 5 or $ 10 bill in your wallet at the end of each month after paying your bills and creating an emergency fund, invest it. This will make it much easier to save for retirement as you will have more investment income to help cover your expenses.
2. Keep educating yourself about finances
There is always more to know about managing your finances. This is especially true for retirement planning because it takes decades, and much can change over that time, including government regulations about retirement accounts and our own lifestyles, and retirement plans. We need to know how to adapt to these changes to keep ourselves on track for our goals and make the best choice for our money.
One of the ways to ensure that we are able to do this is to keep asking questions and try to do better. For example, learning more about how to invest can help you make better choices about stopping your retirement savings so that you can grow your nest egg more quickly, and perhaps more than you expect To retire soon too.
3. Stay healthy
Staying healthy may not sound like financial advice, but your health and finances can be easily intertwined. If you are in poor health, you will probably go to the doctor more often and pay more prescription drugs. You may be forced to retire earlier than you expected, struggling to save you up to that point.
Focusing on your health by eating right, exercising regularly, and learning healthy strategies for managing stress may not help you avoid health care expenses altogether in retirement, but it can reduce them. Can. You can have a long and happy retirement with more money to spend on the things you get in lieu of a doctor’s bill.
4. Saving for the future with living for today
Saving is necessary for the future if you ever hope to retire, but you must fulfill your needs and desires in the present. The movement, known as Financial Freedom, Retire Early (FIRE), encourages people to trim their budgets for bare minimum, often enjoyable activities, allowing them to save more of their income and their Can be retired decades earlier than peers. There is nothing inherently wrong with this approach, but it is not something that is going to appeal to everyone.
Not allowing yourself to do anything fun at present can make it more difficult to stick to your savings plan long term. It is better to come up with a sustainable plan for the long term. Figure how much you need to save per month to retire when you want. And if this is not possible, then look for ways to delay retirement or increase your income in the present, so that you can save for your future and now have some money to enjoy.
5. Take advantage of employer 401 (k) matched funds
Nearly 40% of retirees surveyed said they would encourage their younger siblings to choose a 401 (k) deferral percentage so that they could benefit from their company’s match. This is the free money you get for planning your future, but it is a limited time offer. If you do not put enough money in your 401 (k) during the year to get a match, then you leave it.
Hopefully you are already contributing at least enough to your 401 (k) to get your perfect match, but if not, the first step is to find out how your company’s matching system works. Some may offer dollar-for-dollar matches, while others may offer $ 0.50 on dollar. Most companies cap your match at a certain percentage of your income.
Once you know what you need to do, try to increase your contribution accordingly. You may have to make changes to your budget, but it is worth doing because it reduces how much you need to save personally for retirement.
The five responses above were the most common pieces of financial advice retirees have, but they simply do not deserve the following. Think about your own financial history and what you would like to improve on it. Then, the advice is how to do it.