Tips and tricks to help you live your best life
It is never too early or too late to start saving for the future, experts have advised for years. The sentiment remains true today and saving for the future is easier than it has ever been with the advent of online investment tools and apps. If you haven’t yet started investing in your retirement, fear not, we have investing tips and tricks for every age.
Investing in Your 20s
Experts suggest young adults get started with investing and saving for the future early in life. Not only does it teach good money management habits, but it allows individuals to harness the power of compound interest. According to Mitchell Bloom, if you invest $300 per month between the ages of 20 and 60 you’d have an account with over $1 million in it. If you invested from 30 to 60 that same account would be just shy of $500,000. Compound interest can work wonders.
During your 20s you should also shop around for savings accounts that offer the best interest rate. Even if you were to stash $75 per month into a savings account with a high-interest rate, you can have a healthy emergency fund in under five years.
As a millennial, don’t be afraid to harness the power of the Internet and apps to learn about investing. Mint, Albert, Stash, and Acorns are all app-based financial companies that allow you to better understand your budget and help ensure your money is working for you.
Retirement Savings in your 30s
Your 30s tend to be a time of high spending. Between starting a family, buying a home, and focusing on your career, you may feel like you are maxed out when it comes to cash, but there are always ways to save, and your 30s are an important period for retirement savings.
Experts suggest everyone in their 30s should scrutinize their budget on a regular basis to see if there is any wasteful spending. If you are wasting cash on dining out, entertainment, or other luxuries, consider scaling back and placing that money into a high-yield savings account.
Ensure you are maxing out your 401k contributions each year, especially if your employer is offering a 401k match. In 2018, the maximum 401k contribution was $18,500. Get as close to the maximum as your bills safely allow.
Rounding out Contributions in your 40s
If you’ve been investing since your 20s, you’re most likely in pretty good shape, but even if you haven’t, you still have time to ensure your money can work for you in your later years. Your 40s are the perfect time to sit down and take a hard look at your spending habits and your debt. If you have a great deal of credit card debt it is time to get serious about paying it off or exploring low balance transfer options.
You should also look at your 401k and ensure you are fully-funding it if your finances allow. A 401k can be the perfect vehicle for retirement saving as long as you are contributing the maximum allowable amount.
Your 40s are also the correct time to sit down with a financial advisor to discuss your retirement goals and the financial decisions you have to make to meet your goals. An advisor will be able to walk you through the different scenarios you’ll be facing as you reach retirement age and how to best plan for those scenarios.
Catching up on Contributions in your 50s
Hopefully, by your 50s you’ve been saving for the future for more than three decades, but if you haven’t, you can still catch up. Experts suggest using the catch-up contribution option for your 401k and your IRA if you aren’t comfortable with the amount of savings you have. Individuals over 50 are allowed to put up to $25,000 a year in their 401k and $6,500 a year in IRA accounts to catch up.
You may also want to explore annuities and other financial options to ensure you have enough money to retire. Sit down with an advisor and work through your current finances, your expectations for retirement, and how you’ll finance those expectations as soon as possible.
The Bottom Line
Whether you are in your 20s, 30s, 40s, or 50s, there are ways to start saving for the future. Just because you haven't begun the process yet doesn't mean it’s too late to start! Begin by taking a hard look at your current financial situation and making small changes to improve your financial outlook.
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