Are you ready to start saving for retirement? Knowing where and how to start is overwhelming for most people. So unless you’re independently wealthy, you’ll need to build a retirement fund. The Social Security Administration says Social Security reserves are expected to be depleted in 2034, so it’s unclear how well these benefits will cover the cost of living.
Fortunately, you can start a retirement plan rather easily. Working with a trusted financial advisor in New Jersey is helpful, as they can work with you to create a strategy and develop a retirement plan that reaches your needs and goals.
How Can I Start a Retirement Plan?
Take this process step-by-step as you gain more knowledge and continue to refine how you see the future. These tips help demystify the process and point you in the right direction.
You don’t need any more than $250 to $500 in savings to start a retirement fund. The key is to establish good habits that prepare you for the future. Many brokers offer no-minimum, no-fee retirement accounts, so discuss these with an advisor specializing in retirement planning in New Jersey.
When you meet with a financial planner, you’ll go over what you have in your savings, how much you’ll need to retire comfortably and how much you can afford to put away each month. Don’t worry: a good advisor won’t ask you to scrape together cash for last-minute contributions. The best approach is to put a little away each month.
Consider Your Investment Options
When you know your monthly contributions, choose the best avenues to reach your goals. If you have a 401(k) with your employer, take advantage of it. This account allows you to grow your savings without paying income tax upfront, and some companies also contribute a percentage as a match.
If you don’t have a 401(k), your financial advisor may recommend an individual retirement account, or IRA. There are two types of IRAs—Roth and traditional. You’ll probably benefit from one over the other. For example, people who are just starting their careers often benefit more from a Roth IRA.
Build and Maintain Good Credit
At Leonard Financial Solutions, we take a holistic look at our clients’ finances. Saving is essential, but there are other things to keep in mind. We tell our clients to build and maintain good credit scores as well, which helps secure better loan rates and terms. This way, you’ll pay out less in interest rates and have more money to put toward retirement.
Keep an Emergency Fund
You should maintain at least six months’ salary in a regular savings account. By putting this money away, you can make rational decisions when faced with a crisis, such as a job loss or unexpected illness. Without these emergency savings, you’ll have to rely on credit cards or take out a personal loan, making it harder to reach your future goals.
Saving for retirement starts with good habits. You don’t need to be rich to create a savings plan. And with the uncertain future of Social Security benefits, protecting yourself has never been more important. Call our experienced team of financial planners today to get the right answers to your questions and start developing a plan.