Fortunately, you can start a retirement plan pretty easily these days. Working with a financial advisor in New Jersey is helpful as they can help you create a retirement plan that reaches your needs and goals. In the meantime, here are some basic tips on starting a retirement plan.
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 start preparing you for the future. There are many brokers that offer no-minimum, no-fee retirement accounts, so discuss these with a financial advisor who specializes in retirement planning in NJ.
When you meet with your 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 what you should be putting away every month, you can then choose the best avenues to reach your goals. If you have a 401k, take advantage of it. This account allows you to grow your savings without paying income tax upfront.
If you don’t have a 401k, your financial advisor may recommend an IRA instead. 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 important, but there are other things to keep in mind. We tell our clients to build and maintain good credit scores because this 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 a six months’ salary in a regular savings account. By having this money put away, you can make rational decisions when you’re 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, both of which make it harder to save for retirement.
Saving for retirement starts with good habits. You do not need to be rich to start a savings plan. And with the uncertain future of Social Security benefits, it has never been more important to protect yourself. To discuss starting a retirement plan that makes sense for you, contact Leonard Financial Solutions today.