Just like birds build nests to deliver their families a safe and secure life, people also need to build solid financial foundations so that they can live their lives in comfort. Saving and repaying debt are ways to do this in middle life, but it's also important to be aware of the future and build a nest egg that will safely see you through retirement.
When building up your retirement fund, you need to take into account a number of factors, including:
- Your present age and how long you will be working
- Your desired retirement age
- Your current income
- The annual yearly cost of living raises and bonuses
- Your spouse's income
- Your estimated Social Security benefits
- Your retirement fund's savings percentages, including annuities, IRA's and term life insurance policies.
- The future events you'll need to pay for (for example, the college education of your children)
- Your health care costs beyond insurance
- The financial situation you desire in the future
After examining the present, you can then build on your retirement nest egg. Knowing exactly where you want to be when you retire, and how you can get there, will help you decide how to invest your money.
Tips for retirement saving
These five tips will help you keep on track for the life you want to lead in retirement:
- Save for your nest egg at an early age. Many begin by taking 10% of their paycheck to be direct deposited into a savings account. Many companies will do this for you automatically.
- Build up savings so that you're covered for at least six months of living expenses. If unemployment occurs or there is an unexpected emergency, you have a strong foundation.
- Invest in your company's 401K or 403B plan. The difference between the two is that 403s are only available to employees of tax-exempt corporations.
- Look into a Roth IRA for ways to grow your money tax-free.
- Term life insurance is a great decision even if single. But if you plan on having a family, term life can help provide financial assistance when paying the high costs of a college education for your children or unplanned emergencies.
The sooner you start to build your nest egg, the bigger it will be come retirement. Start small and within your means, and build up as your life progresses. If you have any questions about how to get started, contact your Atlanta financial advisor.