As the song goes ‘You load sixteen tons and what do you get? Another day older and deeper in debt.’ Well, it doesn’t need to be that way. In fact, having enough money for a happy retirement is not a mirage. It just takes some planning, hard work, and dedication to make it happen. With that in mind, here are six ways to turn that dream into a reality.
- Start Investing Early
Don’t wait until your 50’s or early-60’s to start socking money away. Get into the habit of investing early on. Maybe all you can afford is $10 per week, but at the end of the year that is $520 and after 10 years, you will have $5,200 and that is not counting any returns on your investment.
Another tip is to follow the sage advice of Warren Buffet and invest for the long-term. In his recent letter to investors, the Wizard of Omaha offered the following investment strategy. Park your money in the low-cost Vanguard S&P ETF. While it the fees are low, the returns have beaten the market. According to Mr. Buffet, this fund achieved a return of more than 85% from 2008 to the end of 2016.
Granted, this includes the dark days of 2009 when the economy was imploding but very few ‘professional’ money managers have been able to achieve the same results. However, you can enjoy these returns if you don’t start saving, so start putting some money away today.
- Take Advantage of Tax-Free Investment Options
If you are employed then look for ways to take the maximum contribution from your employer’s 401k program. If you are self-employed then set up a 401k program for yourself. While the real world has a way of upsetting your best-laid plans, both options afford you the opportunity to invest pre-tax income.
- Pay Off Your Debts (Better Yet, Stay Out of Debt)
Granted, this is easier said than done as everything revolves around credit these days. But debt can ruin your retirement. As such, you want to get yourself out of debt and then try to stay out of debt.
Cut back on the number of times you go to restaurants, hold off on that new car or that expensive vacation. Doing so will help you to increase the amount of cash you have on hand and this will give you the financial freedom you need to enjoy your retirement.
- Live a Healthy Lifestyle
This might seem like odd financial advice, but medical expenses can be crippling. As such, you want to cut back on foods which could cause problems later, remain active, and look at natural treatments or therapies which can save you money.
Don’t get caught in the trap of needing drugs to manage your ailments. Even with insurance, the only winners are the pharmaceutical companies. Remain active and stay healthy and you won’t need to waste money on unnecessary medical expenses.
- Consider a Reverse Mortgage
Now, this option might not be for everyone. But a reverse mortgage can allow you to accomplish several goals. First, you can freeze your mortgage payments – freeing up hundreds of dollars each month. Second, you can tap into the equity in your home. Third, you use the funds to set up a rainy-day fund.
There is no doubting that reverse mortgages have become more popular in recent years and one plus is that closing costs are coming down. In fact, no closing cost options are out there. So, if you are interested to see if this loan is right for you, then ask your lender what options they have.
- Hold Off on Social Security
This might sound counterintuitive, after all, you have been paying into the fund for years, but holding off on collecting Social Security until you are 70 you could collect up to 32% more than if you elected to collect payments at age 66. Let’s face it, people are living long and you don’t want to run out of money, so this is a great option to make sure you won’t.
As you can see, being financially secure for retirement is not impossible. Following these tips and you will have the funds you need to be happy in your retirement.