Many people believe that you don’t start thinking about retirement until later in life. However, it’s actually never too early to start. Nowadays, people are retiring younger than ever before with more money than they could ever dream of. And it’s actually not that hard. With the right investments and some self-discipline, you can easily save enough money to retire early. You just need to know the tricks of the trade when it comes to investments and savings. Thankfully, we have a few experts up our sleeve with some sound advice for your money-saving needs so you can say goodbye 9-5 and hello retirement!
- Inquire about 401 (k): Almost all major companies offer 401(k) plans which match a certain percentage of whatever you contribute. Most of these matches range from 25% to 100% of your contribution and up to 6% of your salary. Even if the matching is at the lowest percentage you are still receiving something back on your investment which you won’t find anywhere else honestly. Also, you have to remember that the money in your 401 (k) is not taxable income and when you take a the tax break your 6% salary contribution only comes to around 4%. What a deal!
- Roth IRAs are an Alternative: If you don’t have a 401 (k) as an option because you are with a small employer you can create and manage your own which for those who are younger the Roth IRA is usually best. However, it’s important to note that the contributions to IRAs are not tax-deductible, however you can withdraw from the IRA anytime and it will be tax-free.
- Gradually Pay Off Student Loans: Student loans can be a real drag and suck up a lot of your spare cash so don’t feel like you must be in a rush to pay them off. Most student loans have a fixed interest rate from 3.4 %-6.8% which is much lower than private student loans. And you should know that $2,500 of this interest is tax deductible so pay of those loans gradually. No need to siphon all of your money into payments.
- Don’t Cash Out Your 401 (k) Early: When the times get rough or you leave your job it can be tempting to cash out your 401 (k) plan—don’t do it! You have several other options that are much more beneficial such as leaving it with your former employer, moving it into an IRA or even rolling it over into your new plan with your new job. While you can have your employer write you a check you need to realize if you are under 55 you will get an early withdrawal penalty of 10% as well as your employer will take 20% automatically for taxes. So resist the urge!