These moves could spare you a world of financial stress.
Retirement is a period of life many people look forward to. But unfortunately, a lot of seniors find that retirement is a stressful time of life, financially speaking.
It’s hard to go from a steady paycheck to living off of savings and Social Security. And many retirees have a hard time spending their money for fear of running out.
A retirement filled with financial worries, though, may not be a pleasant one. To avoid that fate, make these essential moves.
1. Save steadily
If you wait too long to start funding your IRA or 401(k) plan, you might really scramble to catch up. A better bet is to consistently fund a retirement account throughout your career. You may find that small contributions add up nicely when you start making them in your 20s and keep that habit up.
Not sure how to find the money when you’re first starting out in your career? A good bet is to claim your full employer 401(k) match. That way, you’ll get free money for retirement that could help kick-start your savings efforts nicely.
2. Invest your savings aggressively
Getting money into your IRA or 401(k) is definitely a good start. But you also want that money to grow — and at a decent clip. That’s why it’s important to invest in a reasonably aggressive manner. For the most part, that means going heavy on stocks until retirement nears. Playing it too safe could end up stunting your nest-egg’s growth despite your efforts to fund it year after year.
Let’s imagine you’re able to contribute $300 a month to a retirement account over 40 years. If your investments deliver an average annual 8% return, which is actually a bit below the stock market’s average, you’ll end up with a nest egg worth roughly $933,000.
3. Boost your Social Security benefit
You’ll ideally enter retirement with plenty of savings to tap. But at some point, there’s the risk that your savings will run out. Social Security, on the other hand, is designed to pay you your monthly benefit for life. So the higher that benefit is, the less financial stress you’re apt to encounter.
There are a few different things you can do to score a higher Social Security benefit. And one of them is something to focus on during your working years — growing your earnings.
The more money you make, the more Social Security you stand to collect. As such, try your best to boost your skills to attain promotions, and join the gig economy if your wages at your main job just don’t seem to be picking up.
When you’re older, you can also look to delay your Social Security filing past full retirement age. Doing so will allow you to lock in a higher monthly benefit for life.
Nobody deserves a stressful retirement. And thankfully, you can take steps to avoid that fate. All you need to do is prioritize your nest egg, invest aggressively, and be savvy about eking out as much Social Security income as you can.