Do you worry about the penalty assessed for a late credit card payment? Think of the late payment penalty you cost yourself every time you delay putting money into your retirement savings. Follow these steps to get started on your retirement savings game plan.
1. Use an online planning tool or seek professional advice to determine your ultimate financial goals for retirement, and the amount you will need to save each month to attain your goals.
2. Include retirement savings in your monthly budget and pay yourself first.
3. Open an IRA and contribute a set dollar amount every month.
4. Make sure you are contributing at least the amount needed to maximize the employer match feature, if your (k) plan has one – it’s like free money.
5. Can’t do it all at once? Set up a savings plan where you start out saving at a rate you can live with, say six percent of your income, and, over the course of a number of years, work up to the amount you need to be saving to reach your retirement goals If you have to work up to the amount you need to be saving – vow to raise your employer plan contribution percentage one percent every six months Chances are, you won’t even notice the reduction in your paycheck at this level of increase.
6. Remember to diversify your investments – not only between the investments offered in your employer-sponsored retirement plan or IRA, but also between where you invest your savings – be it an IRA, (k) plan, purchasing a home, or all three.
7. Revisit your savings plan every year Your financial situation, your view of retirement, your health, and your family status – can all change within a year’s time.