Five Ways to Fulfill Your Retirement Dreams
Guest Post by Jackie Waters
Five Ways to Fulfill Your Retirement Dreams
Depending on
your current age, retirement can sound like a lifetime away from now. Many
people establish short-term savings goals, but what about the last 20 to 40
years of your life? Have you truly established a plan for yourself once you
don’t have to go to the same job everyday? Creating the ideal retirement for
yourself isn’t rocket science. In fact, here are five easy ways to turn your
retirement dreams into reality:
1.
Set your goal
Do you want to retire at age 50, or do you want to work into
your 60s? Where do you envision the rest of your life -- on an exotic island,
in the mountains across country, or in your home of 30 years? You can certainly
have your “golden years” be fruitful when the time comes, but first you need to
decide what that picture looks like. Once you have a specific idea in mind, you
can begin to plan on saving to fulfill those dreams.
2.
Determine your savings plan
Many companies offer a 401(k) savings plan to their
employees. This can either be matched by their employers at a considerable rate
(sometimes up to as much as 15%), or it is simply for the employee to
contribute into on a weekly or monthly basis. Of course, this type of savings
account is optional, so you won’t automatically accumulate savings -- you’ll
have to elect to do so. Speak to your HR representative about this type of
benefit for more information.
An especially good option for those who are younger, and if
your company offers it, is converting to a Roth 401(k). The beauty of this retirement
option is that even though you are paying taxes on the front end, when you are
younger and in a lower tax bracket, you will reap the benefits later when you
retire, as all earnings are tax-deferred. You cannot take tax deductions on
your contributions, but the payoff when you retire is worth it.
If you are self-employed, living and working overseas, or
simply just want another retirement source, you may want to think about a
traditional or Roth IRA. Although each type of IRA has rules
and stipulations, both allow you to make yearly contributions of up to $5,500
per year. With accumulated interest on top of annual additions, you could
retire very comfortably if you start saving at a young age.
It’s also wise to keep all of your income and retirement
savings tax documents in order from now until retirement,
either with an accountant, W2 or 1099 software, or your own personal system of
organization. You don’t want to be caught unprepared for an audit, especially
once you’ve reached retirement.
3.
Set your goal
Do you want to retire at age 50, or do you want to work into
your 60s? Where do you envision the rest of your life -- on an exotic island,
in the mountains across country, or in your home of 30 years? You can certainly
have your “golden years” be fruitful when the time comes, but first you need to
decide what that picture looks like. Once you have a specific idea in mind, you
can begin to plan on saving to fulfill those dreams.
4.
Determine your savings plan
Many companies offer a 401(k) savings plan to their
employees. This can either be matched by their employers at a considerable rate
(sometimes up to as much as 15%), or it is simply for the employee to
contribute into on a weekly or monthly basis. Of course, this type of savings
account is optional, so you won’t automatically accumulate savings -- you’ll
have to elect to do so. Speak to your HR representative about this type of
benefit for more information.
An especially good option for those who are younger, and if
your company offers it, is converting to a Roth 401(k). The beauty of this retirement
option is that even though you are paying taxes on the front end, when you are
younger and in a lower tax bracket, you will reap the benefits later when you
retire, as all earnings are tax-deferred. You cannot take tax deductions on
your contributions, but the payoff when you retire is worth it.
If you are self-employed, living and working overseas, or
simply just want another retirement source, you may want to think about a
traditional or Roth IRA. Although each type of IRA has rules
and stipulations, both allow you to make yearly contributions of up to $5,500
per year. With accumulated interest on top of annual additions, you could
retire very comfortably if you start saving at a young age.
It’s also wise to keep all of your income and retirement
savings tax documents in order from now until retirement,
either with an accountant, W2 or 1099 software, or your own personal system of
organization. You don’t want to be caught unprepared for an audit, especially
once you’ve reached retirement.
5.
Decide how you want to save
Are you a person who wants your savings to be taken out of
your weekly paycheck automatically, or would you rather seek out your own
method for contributions? Maybe your intentions are to first build an emergency
fund or pay off a large debt before you begin investments, which means you only
start off by adding your income leftovers to your savings. Perhaps for the IRA,
you would feel more comfortable adding one big chunk at a time, every few
months. While it’s advised that you should be making contributions as often as
possible due to compound interest, unique situations or personal
beliefs interfere with the ability to make weekly or monthly additions.
6.
Consider passive income sources
If you have a steady source of income that allows you to
retire comfortably, you could still be making money and gaining revenue through
passive incomes, even while you’re retiring in
paradise and the paycheck is no longer automatic. Different kinds of passive
income include real estate investments, writing a popular blog or eBook,
renting out a space in your home, and affiliate sales marketing.
Since you assumably have more time on your hands, retirement
is a fantastic opportunity to take small risks, like becoming a silent partner
on a new business or channeling your love for photography and selling pictures
online. With passive income, the opportunities are endless.
7.
Wait for retirement before spending
It’s tempting to withdraw your savings amount before
retirement, especially if a financial crisis hits and you need money quickly.
However, with several retirement savings options, there are penalties, taxes,
and other fees that are accounted for before you’re able to see the fruits of
your labor. For instance, with any type of IRA, you have to pay an additional
10% tax for early withdrawals. With other forms of long-term
investments, you may encounter significant hardships with removing money from
an account that requires you to first be of a certain age.
Photo credit: Pixabay
8.
Decide how you want to save
Are you a person who wants your savings to be taken out of
your weekly paycheck automatically, or would you rather seek out your own
method for contributions? Maybe your intentions are to first build an emergency
fund or pay off a large debt before you begin investments, which means you only
start off by adding your income leftovers to your savings. Perhaps for the IRA,
you would feel more comfortable adding one big chunk at a time, every few
months. While it’s advised that you should be making contributions as often as
possible due to compound interest, unique situations or personal
beliefs interfere with the ability to make weekly or monthly additions.
9.
Consider passive income sources
If you have a steady source of income that allows you to
retire comfortably, you could still be making money and gaining revenue through
passive incomes, even while you’re retiring in
paradise and the paycheck is no longer automatic. Different kinds of passive
income include real estate investments, writing a popular blog or eBook,
renting out a space in your home, and affiliate sales marketing.
Since you assumably have more time on your hands, retirement
is a fantastic opportunity to take small risks, like becoming a silent partner
on a new business or channeling your love for photography and selling pictures
online. With passive income, the opportunities are endless.
10.
Wait for retirement before spending
It’s tempting to withdraw your savings amount before
retirement, especially if a financial crisis hits and you need money quickly.
However, with several retirement savings options, there are penalties, taxes,
and other fees that are accounted for before you’re able to see the fruits of
your labor. For instance, with any type of IRA, you have to pay an additional
10% tax for early withdrawals. With other forms of long-term
investments, you may encounter significant hardships with removing money from
an account that requires you to first be of a certain age.
Ms. Waters is a mother of four boys, and lives on a farm in Oregon. She is passionate about providing a healthy and happy home for her family, and aims to provide advice for others on how to do the same with her site Hyper-Tidy.com.
