Are You Ready For Retirement

It seems like as every year passes people have to work longer before they can afford to retire

. It is no secret that most Americans are not financially prepared to retire and that most people spend more time planning their vacations than they do their retirement. What can you do to make things better for yourself financially? Here are a few tips for ensuring future financial security:

1.Start saving early. Your biggest ally is time. If you save $200 a month beginning at age 25, with the miracle of compound interest, you will not have to do much else to be ready for retirement. There is nothing better than having 40+ years ahead of you to save money.

2.Participate in a 401K plan. Although some companies have dropped the match to stay financially viable, most companies still match at least the first 3% of what you contribute to your 401K. This is free money and there is no better kind. Because it is before taxes, you will most likely not even miss 3% of what you are making that will be going for your retirement. You should be contributing to your 401K at the amount that your company matches.

3.Limit your debt and pay any debt you have off as soon as possible. Very rarely is debt without an interest payment. The only kinds of debt that are not considered negative are a mortgage and a student loan. Homes increase in value and student loans increase your earning potential. With the possible exception of a car loan, any other type of debt will only hold you back. Pay it off as quickly as possible and work towards paying off your home. The lower your expenses are when you retire the farther ahead you will be.

4.Open a Roth IRA. A Roth IRA is one of the best ways to save for retirement outside of your 401K. It is funded with after tax dollars making it so that you will not have to pay taxes when it is used. You can also use the money you deposited without penalty before age 59. These options make this a great way to save.

Many people will be working longer than individuals in the past, but we will also be living longer. Find something you enjoy doing and consider making a part time business out of it and this will give you further options during your golden years. As long as you plan for the future, you will be headed in the right direction.

by: Marjorie Salada

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