Planning for retirement can be tricky. What should you be doing right now? How do you best prepare? How much money should you be contributing and to where?
By planning properly, and starting early (experts suggest in your 20s), you can save up enough to comfortably retire.
As of right now, the earliest you can start claiming Social Security benefits is age 62. However, by filing early you’ll sacrifice a portion of your benefits. If you were born in 1960 or later, the full retirement age (which is also the full Social Security benefits age) is 67. Your benefit will increase if you delay it and work until age 70.
To get started, The Sum runs you through these 5 tips to help you prepare starting right now.
#1 PREPARE EARLY
Start your savings as early as possible, maintain a modest lifestyle and invest any additional income you accumulate over time.
#2 SAVE STRATEGICALLY
Experts recommend investing at least 10% of your income (more if you can or if you need to catch up).
#3 DIVERSIFY YOUR PORTFOLIO
Use a tax-savvy account to save like a traditional 401(k), where contributions are pre-tax, or Roth IRA, which allows for after-tax savings and tax-free withdrawals when certain conditions are met.
#4 INVEST IN YOUR HEALTH
Spending on healthcare, from medications to copays, can be costly. Try to stay physically fit to keep your body in the best shape possible.
#5 EXPECT TO SPEND MORE
Inflation and prices will go up throughout your lifetime. So plan to save more than you think you’ll need.
