working and retirement

Getting into the Right Retirement Mindset throughout your Career

While most individuals in their early and late 20s think that their retirement years will take ‘forever’ to arrive, the truth is that this time of your life will arrive far sooner than you realize. The main secret to creating a good-sized retirement account is to start saving as quickly as possible after you start working. 

Getting into the right mindset regarding retirement savings and taking the appropriate action will help ensure that you get to enjoy this time of your life without worrying about money – regardless of how old you currently are. 

  1. Your 20s

This is the time to take full advantage of any 401(k) matching programs your company may be offering, and if you enroll in a program like this before reaching the age of 25, it will significantly reduce the amount of money you’ll need to save on your own than if you waited until reaching your 30s and older. 

Studies have revealed that if you’re able to increase your income by just $5,000 per year in your 20s, it could enable you to accumulate an additional $500,000 during your working life. Just saving 10% of this additional income would see your retirement account grow by a minimum of $50,000. 

  1. Your 30s

One of the best things you can do to prepare financially for your retirement during this time of your life is to stop accruing consumer debt. Wherever possible, pay cash for anything you purchase and direct any bonuses, tax refunds or overtime income towards getting debt repaid as quickly as possible. 

Although there is nothing wrong with splurging on a treat occasionally, money should only be spent if it won’t cause you to go into deeper debt. 

  1. Your 40s

This is the time to make sure that you become as indispensable as possible to your employer, and one of the best ways to do this is to improve your existing skillset. Consider taking additional training courses that will help you to perform better in the workplace – this could even lead to you being given unexpected raises over time, which could then be invested as well. 

  1. Your 50s

At this time in your career, you should consider catching up on retirement savings wherever possible – especially if you weren’t able to contribute to any dedicated plans earlier in your career. By now, the vast majority of your debt should also have been cleared – including your mortgage and any student loans that may have still been looming. 

The extra cash that would previously have been used to repay the debt should now be channeled into your retirement accounts wherever possible. In addition to a 401(k), you should set up a Roth account – this will enable you to save a larger, tax-free amount of money towards your retirement every year. 

The main aspect that will ensure a comfortable retirement is to make it as easy as possible to save money throughout your working life. Sticking to a realistic budget and not spending frivolously on unnecessary items will allow you to retire without having to worry about finances. If you’d like to learn more about saving towards your retirement, contact us today.

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feet on the ground

Finding your Feet Financially after Quarantine

Not only has COVID19 left most Americans feeling afraid about their physical health; several families have experienced stress levels unlike anything ever seen before due to sudden job losses or a reduction in working hours. Although life will eventually return to some level of normalcy over time, several families will need guidance with regards to getting their finances back on track.

  1. Prioritize Rebuilding your Emergency Fund

Job losses and reduced working hours have seen millions of families across the world having to dip into their emergency funds – with many of them still not having enough money to cover basic expenses. Once you’re back at work and earning a decent income again, your first financial priority should be rebuilding your backup savings account. 

Each time you receive any form of income or an unexpected amount of money, putting just 5% to 10% of it into a backup account will help rebuild your emergency fund over time. If you’re fortunate enough to receive overtime pay or stimulus checks, part of this money should also be set aside. 

  1. Take Advantage of Historically Low Interest Rates

if you’ve been fortunate enough to rebuild your emergency savings account, the next practical step that should be taken is to repay any consumer debt you may have as quickly as possible. Lower than usual interest rates will work to your advantage at a time like this because it will allow you to apply more of your money towards your debt principal instead of the interest payments. 

  1. Create a New Budget

During quarantine, many families were able to reduce the cost of expenses such as gas, transportation and childcare because they were spending more time at home. 

Now is the right time to reevaluate your existing budget to see if there are absolutely any expenses that could be reduced or even eliminated completely. For example, if one spouse is currently unemployed, would it not be more beneficial to eliminate the cost of childcare until such time as new employment can be found? 

Wherever possible, look for ways to reduce each expense in your budget. This may require changes in your grocery and entertainment budgets, for example. Instead of purchasing all organic foods, you may need to see where cheaper groceries can be obtained – even temporarily. Instead of enjoying a day at the movies, pop some popcorn in the microwave or on the stovetop and enjoy a show on Netflix. 

  1. Consider Speaking with a Financial Advisor

If you’ve secured alternative employment and you need help rolling retirement funds over from one account to another, this is something that should be performed by a qualified financial advisor. They will also be able to provide advice regarding how to start saving towards retirement or even for another large expense, such as a home. 

Although the pandemic has left millions of families feeling completely overwhelmed in several ways, it is possible to start re-gaining control of your finances in a step-by-step manner. If you require advice in this regard and would like to ensure that you have enough money to cover future expenses, get in touch with us today.

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Stress Free Retirement

Ensure your Retirement is as Financially Stress-free as Possible

A number of individuals simply don’t give much thought to retirement – until such time as they realize that they will be entering this time of their lives within just a few years. However, if the right amount of planning and thought is put in early enough, your golden years could end up being some of the most enjoyable and financially stress-free times of your life. The tips below will help you get started on this important journey.

  1. Get as Much Debt as Possible Paid Off Now

Most people who retire will not have as much disposable income available to last from one month to the next. As such, now is the time to eliminate as much of your debt as possible.

Repaying as much debt as possible won’t only save on interest and bank charges; it will allow you to free up more of your current income so that you’ll be able to get by easier once you’re no longer working. Another advantage of repaying debt while you’re still employed is that you won’t have to worry about struggling to repay it when you’re living on a lower income. 

  1. Save as Much Money as Possible 

Regardless of whether you’re in your 20s and just starting out in your career or you’re closer to retirement age, saving for your future is essential. A number of surveys undertaken over the years have revealed that as much as three-quarters of employees have less than $30,000 set aside in savings towards retirement – definitely not enough to survive on. 

The sooner you start saving, the less you’ll have to set aside each month for this time of your life – thanks to the wonder of compounding interest. If you’re still in your 20s, you’ll usually be able to save between 10% and 15% of current income. However, if you only start savings in your 40s, you’ll have to sacrifice as much as 50% of your current income so that you can survive your golden years. 

  1. Spend Carefully

Although your retirement is supposed to be about enjoying yourself, it doesn’t mean that you should go and spend frivolously on costly vacations or other unnecessary items – unless you’re 100% confident that you can afford to. 

If you’ll still be paying off your mortgage after retiring, it’s crucial to ensure that you won’t be paying a penny more than 20% of your retirement income each month on it. Whenever spending money after retirement, don’t be afraid to ask if any senior citizen discounts are available – it never hurts to ask. In some cases, you could have as much as 50% shaved off the original price of an item or service. 

Planning ahead for your retirement years will help ensure that you’ll be able to enjoy yourself as much as you can without constantly having to worry about finances. If you’d like to ensure that you’ll be able to retire as financially comfortable as possible, contact our investors today.

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extra income

Accumulating an Emergency Fund on an Irregular Income

Are you currently only able to work part-time, freelance from time to time or does your job only provide you with a commission-based form of remuneration? If any of these scenarios apply to you, you’re most likely finding it extremely challenging to set aside any amount of money for unexpected emergencies. However, there are a few steps you can take to help build that necessary emergency fund as quickly as possible.

  1. Determine your Bare Bones Budget

Before you’ll be able to even start planning your emergency fund, it’s crucial that you know what your baseline budget amounts to. 

A baseline budget is that which only covers absolute essentials such as rent or mortgage, transport, food, utilities, debt repayments, and in some cases, childcare costs. Compiling this part of your budget is simply – all you require is a pen and paper so you can compile a list of the above-mentioned items. 

After determining what’s needed to cover these costs, you’ll be able to start looking at calculating a baseline amount of money to save each month – in months where earnings are higher, this can always be increased proportionately. 

  1. Calculate Discretionary Expenses

After calculating how much is needed to survive, it’s time to make another list of expenses for items such as cable, any entertainment costs for activities outside your home, expenses related to sports or hobbies, and meals eaten at restaurants. 

If you’re having a hard time finding where your money is going, you may need to inspect bank statements and credit card bills. Once this has been done, you’ll be able to see exactly where to cut your spending – as drastically as possible. 

  1. Calculate your Average Monthly Income 

Although you might think it’s impossible to do this when earning irregular income, calculating your average monthly income is easier than you think. 

Again, this will involve pulling bank statements for the past 12 months and calculating the total amount of income you’ve received during that time. Dividing the total by 12 will provide you with an average rate of income that you’ve earned on a monthly basis, while also allowing you to see which times of year were quieter with regards to earning money.

  1. Start Building your Emergency Fund

Most financial experts recommend having between three and six months of expenses in a separate savings account, but it can be difficult to do this – especially with a fluctuating income. 

If this goal seems too overwhelming, aim to start off with a backup fund of just $1,000. In many cases, you’ll be able to build this amount of money up by selling a few unwanted items, cutting back on as many discretionary expenses as possible, or even requesting overtime hours at your place of employment if they are available. 

Once you’ve accumulated your $1,000 fund, consider having just 5% or even 10% of your irregular income transferred to some form of a savings account as it comes in as well – this will add up over time. If you would like to learn more about building an emergency fund or planning for your future, contact us today. 

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