02/23/2021
Dreaming of retirement is what everyone does, but the question is what do you do to prepare for it. Read below for some of the best tips/secrets to prepare for retirement. Remember you can never start to early!
1. They Understand That Their Income Is Their Biggest Wealth-Building Tool.
Smart investors take advantage of their biggest wealth-building tool: their income. Thatâs right! No matter how large or how small their household income is, they give every dollar a purpose. They also steer clear of debt because they know that living debt-free gives them the freedom to do more with their moneyâlike plan for the future.
2. They Make A Monthly BudgetâAnd Stick To It.
They know how much they spend on groceries, dinners out and new clothes. And if they run out of coffee money before payday, they drive past the coffee shop to avoid overspendingâeven if itâs just a couple of bucks at stake. They know the small, everyday choices make the biggest difference in the long run.
3. They Invest 15% Of Their Household Income.
After they pay off all their debt (except the mortgage) and save three to six months of expenses, smart investors allocate 15% of their household income to retirement. In a recent study of millionaires, almost half of millionaires (48%) said they saved 16% or more of their income each month!
By investing at least 15% of their income, theyâre able to make real progress toward a secure retirement while still working toward other financial goals like saving for their kidsâ college and paying off their mortgage.
4. They Have A Long-Term Approach To Investing.
Informed savers donât play checkers with their investments. They donât jump from one investment to another in reaction to or anticipation of stock market changes. Thatâs because they have a long-term approach to investing. They understand that mutual funds with a solid history of growth are historically a great investment choice to stick with for the long haul. So stay focused and stick with it!
5. They Have A Plan, And They Update It As Needed.
People who are good with investing know where their money is going and how much itâs growing. They keep tabs on their investments through annual check-ins with an investing professional. They also meet with their pro after big life changes like a new baby, job transition or family move to review the potential impact to their savings plans.
6. They Work Together With Their Spouse (If Theyâre Married).
Couples who are on the same page when it comes to money are more likely to win with investments. They work as a team and win as a team, deciding together on their money goals and how theyâll reach them. And many financially successful couples arenât just focused on getting aheadâtheyâre also fueled by a mutual desire to be generous.
If youâre single or newly single, youâre not off the hook! Find an accountability partnerâmaybe a close friend or trusted family memberâwho will encourage you and keep you focused on reaching your financial goals. You canât do this alone!
7. They Donât Borrow From Their 401(K) Plans.
This is a big one. Borrowing from your 401(k) account might seem like a great way to come up with some cash for an unexpected expense. But successful long-term investors know a 401(k) loan comes with risks like potential taxes and penalties if you canât repay the debt. Even worse, the loss of long-term compound growth on the money you borrow could add up to thousands. Donât do it!
Retirement-minded people make sure they have a solid emergency fund in place to take care of unexpected expenses, so they can leave their retirement savings to grow over time.
8. They Buy Long-Term Care Insurance.
If you want to win with money, you need a good offense and a good defenseâthatâs where insurance comes in. Insurance protects your money when life happens, which is why investors with a healthy nest egg understand the importance of purchasing long-term care insurance for retirement.
A long-term illness could cost a family hundreds of thousands of dollars in medical expenses, especially if care requires a lengthy stay in an assisted-living or skilled nursing-care facility. Long-term care insurance will help cover those expenses so you donât end up spending your retirement savings for long-term care.
9. They Live Below Their Means.
You wonât find retirement-savvy people spending more money than they make. Nope! They buy modest houses and pay cash for vehicles and vacations. This leaves enough money to stash away for retirement. They donât need the latest and greatest gadgets because they donât care about keeping up with the Joneses. They are content with what they have and focused on their financial goals, which helps keep their priorities in check.
10. They Meet Regularly With An Investment Professional.
Wise investors know that a qualified professional is worth their weight in gold. In fact, 68% of millionaires have said they worked with a financial advisor or investment professional to achieve their net worth.
Having someone in your corner to help you choose the right mutual funds for your portfolio makes a huge difference. Saving for retirement is too important to do on your own.
