How to Save for Retirement
1. How Much Do I Save?
Try to put 10 to 20 percent of your income each year into money toward your retirement. Most families can do that if they make savings a priority and keep debt and spending manageable.
2. It's never too early to start saving.
If you're nervous about committing dollars to long-term savings, keep in mind that, under certain circumstances, you can borrow from your retirement savings accounts or withdraw money without penalty.
3. Tax breaks are key.
The 401(k) plan is great because earnings can build quickly because they're tax-deferred and certain contributions may reduce your taxable income. Many employers even add money to your account as an extra incentive. You also may want to consider IRAs and annuities.
4. Look at different options.
Consider a mix of savings and investments such as certificates of deposit, individual stocks, and an assortment of mutual funds. This way you are not dependent on one investment but several. You are less likely to fail this way.
5. Be a LITTLE daring.
Don't put all your money on safe bets. If you've got 10 or more years before you retire, your investments should have enough time to ride out fluctuations in the market and make up for lost ground.
6. Always make sure you've got all the facts.
Lack of information can cost you hundreds or thousands of dollars in taxes, fees, penalties or bad investments. Before putting your money anywhere make sure you've got all the bases covered.
7. Always keep yourself update on your retirement savings.
Take a look at your savings and investments at least every three months, to make sure they're achieving your goals. Review your overall strategy at least every year, to make sure it still makes sense.
8. Have an eye out for fraud.
Common cons involve promising fantastic returns on investments that turn out to be fraud. Always make sure you have all the facts and perhaps run the paperwork through a lawyer.
9. Know the risks involved with your investment products.
The FDIC and other regulators require that banks and thrifts selling investment products (such as stocks, bonds, mutual funds and annuities) inform consumers that these are not deposit accounts protected against loss by the FDIC (including loss of principal due to market fluctuations). Despite our efforts, some institutions fail to properly disclose this information and some consumers fail to understand their risks.
10. There is a$150,000 insurance limit on deposits.
A person's 401(k) funds, in certain situations, are added to any IRA or Keogh accounts at the same institution and are insured up to $150,000 in total.
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