Everyone has retirement dreams. But dreams are not reality. The reality is if you want your retirement dreams to come true you have to be intentional about them. That means you have to plan for retirement. It means you need to start saving, now. So what’s the best way to save for retirement? Well, you could win the lottery. That would be nice, but that’s just another dream.
What you really need to do is to start putting money away in a retirement plan?
Max Out Your 401(k)
Not everyone has access to a 401(k), but most Americans who have a job do. If you do, then start using it. You might not be able to max out your 401(k), but you can at least start saving a litt le. For those who can max out their savings, a retirement plan can be a huge benefit. Not only do you start putting money away for your golden years, but you also spend less money and lower your tax bill at the same time. What’s not to like about that? Maxing out your savings can pay big dividends.
So really, if you want to make saving for retirement simple, you just need to take two steps.
Step #1: Start working – let’s assume you’ve already got this step taken care of. Once you have a job, it’s time for step two.
Step #2: Save Money – it’s really that simple. Of course, not everyone can max out his or her 401(k). The reality is most people can’t afford to put away 50 percent of their gross earnings every paycheck. But even if you contribute 10% of every paycheck, with a 3% company match, you can save significant money over your lifetime. As that money grows, you could end up with more than enough to live on when you do finally retire.
Start With What You Can
Even if you start a 401(k) later in life, you can still accumulate a significant nest egg to have at your disposal during retirement. For example, if you were to work for 30 years and save $18,000 a year in your 401(k), with a 6 percent return rate you would have roughly $1.5 million saved up when you retire. Again, not everyone can save that much each year, but even small savings can add up big over time.
There Are Some Downsides
Of course, not everything is a bed of roses with 401(k) plans. Typically your investment options with a 401(k) are not as good as they would be on the open market. Fees are also higher. But having some kind of retirement plan is better than no retirement plan. So, if you feel like your retirement plan is just a dream, it’s time to start making that dream come true. Start by putting away as much as you can. Whenever you can put away more, do it. You’ll be surprised how much it can grow over your lifetime. So stop dreaming and start saving.