The phrase “living a slow life” is trending on the internet. In these posts, users discuss a simplified version of life that evokes the natural ease and flow of the world. However, for most people today, this dream cannot truly become a reality until it is time to retire from the workforce.
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Still, depending on where you retire, the amount of money you can live on may be limited, leading to extra expenses and stress, which may not make your life any easier.
GOBankingRates reached out to several savings experts to outline some key strategies, including simple approaches and frugal methods for saving for retirement. If you want to live simply and frugally, here are his five top strategies for saving for retirement.
Save early, save often
When you’re young and just starting your career, retirement may feel like an afterthought and something you can contribute later. Natalie Warb, a savings expert at Couponbirds, says it’s a good idea to start contributing to retirement accounts, especially his 401(k) plan, early.
“Early contributions can lead to benefits such as compound interest over time, the possibility of matching contributions with your employer, and the ability to lower your taxable income for tax savings,” Mr Warb said. “According to a report from Vanguard and Fidelity, the average long-term return for 401(k) plans invested in global stocks and bonds is approximately 6% to 8%.”
Brian Quigley, financial expert and founder of Beacon Lending, encourages everyone to understand the power of compound interest.
“Start by allocating a percentage of your monthly income to a retirement account such as a 401(k) or IRA,” Quigley says. “Over time, consistent contributions combined with the magic of compound interest can work wonders. It’s not just about saving, it’s about saving wisely. Diversify your portfolio to reduce risk. Diversify and regularly review your investments and make adjustments based on your age, risk tolerance, and market conditions.”
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Automate your savings
It’s great to start saving for retirement, but how do you actually hold yourself accountable and make sure you’re funding your future? Warb recommends consistent giving. We advise you to automate your savings to ensure that.
“Set up automatic transfers to have a portion of your income deposited directly into your retirement savings account,” says Warb. “According to a study by the Employee Benefit Research Institute, 79% of employees who automate their savings make consistent contributions, compared to 57% of employees who donate manually. It’s nothing more than that.”
Prioritize planning for retirement
No matter your age, income, or current financial situation, planning for retirement starts with that as your main goal. To do that, Warb says, they need to not only cut expenses, but also stick to a budget. This will prioritize saving for retirement to the top of your list.
“Review your monthly and annual expenses,” says Quigley. “While a mortgage is often the largest monthly expense for many people, it offers significant savings opportunities. Consider refinancing opportunities when interest rates drop. Intuition It may seem counterintuitive, but paying a little extra toward your principal each month can save you a lot of money in the long run.”
“Over the course of a year, these savings can add up to more than $150,” added Warb. “Although seemingly small, incorporating these savings into a disciplined retirement plan can pay off big in the long run. Once the plugin is installed, it works automatically and continues to work. savings can be made.”
Shopping: Choose generic brands
You may want to shop until your cart is full or until you find your favorite big name brand. It might be a weekly trip to the grocery store or splurging on yourself some luxury clothing. But if you do that, you’ll end up paying top dollar and have little, if any, left over for savings.
But we all need necessities like food and clothing. So what’s the solution?
“To save money, choose generic brands over name-brand products,” says Warb. “According to Consumer Reports, choosing a generic brand can lead to savings of approximately 20% to 25% without sacrificing quality to meet your everyday needs.”
Waiting for Social Security to become cash
It may also be a good idea to dip into your savings or tap into some of your 401(k) funds for emergencies. That’s not necessarily desirable, but doing so should be discussed on a case-by-case basis. However, one thing you don’t want to touch on is your Social Security benefits. Warb advises waiting as long as possible to receive them.
“Delay claiming Social Security benefits until you reach full retirement age or later,” Warb said. “By doing so, individuals can receive higher monthly benefits and secure a more comfortable income in retirement. Claiming benefits at age 67 ensures that you receive your full benefit. to maximize its value.
“On the other hand, retiring at age 62 may result in reduced benefits, while retiring at age 70 may increase benefits even more. By delaying claiming Social Security benefits, individuals can It can improve your financial security later in life.”
This article originally appeared on GOBankingRates.com: Living Simple and Frugal: 5 Essential Strategies for Saving for Retirement
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