– Getting Started & Next Steps
A Guide on How to Save for Retirement
One of the important financial decisions that you should make when still young is saving for your retirement. Once you retire, you might not have a reliable source of income, and the only means of survival is your life savings. Therefore, when you still have a job, you should not spend everything on mortgage and lifestyle. Ensure that much of your salary is saved for your retirement. What is the most suitable saving plan for retirement? No doubt, deciding on the right retirement formula can be an overwhelming and confusing task. If you are not sure about the saving formula to adopt, then you are in the right place. The article herein discusses some of the saving plans that one should try to live an independent life after retirement.
An important saving approach that you should consider is the 15% rule. The 15% rule says that you should save 15% of your pre-tax salary for retirement. This is a suitable rule for saving for retirement, but you should know that it has its drawbacks. With this saving plan, you will be required to start saving at an early age. The key to ensuring that you have enough to spend during retirement is starting to save before you hit 35. Also, you should consider the fact that your income might change from time to time. click on this site to learn some of the drawbacks associated with this rule of saving for retirement.
If you don’t like the 15% rule, you should consider the 80% rule. 80% saving rule means that your savings should be enough for you to draw 80% of your salary at the end of your final salary. The flaw of this saving rule is that the other sources of income are not considered. click here to learn more about the 80% rule of saving for retirement.
Next, you should consider the 4% rule. 4% rule is a technique to use in calculating the amount you need to save to achieve the 80% rule. Most people usually find it hard to generate the right amount to save. The right means of using this saving rule is working with a financial advisor. Hiring a financial advisor means that you will get expert advice on how to save for retirement. On this website, you will learn how to identify a good financial advisor to help with your retirement planning.
The retirement saving method that you should consider is salary multiples. Salary multiple is a simple rule that states that you should have saved twice your annual salary by the time you are 40, four times your annual salary by the time you are 50, and six times your annual salary by the time you are 60, and the sequence continues. There will be no need to worry about surviving once you retire if you use the above-discussed rules to save.