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Saving up for retirement is an important step in ensuring you will be able to live comfortably when you are old enough to stop working. But getting to the point of having enough money saved could be tough if you don’t follow the right strategies, and also if you don’t earn a lot of money, to begin with. Check out the tips below to get it done and to build your wealth successfully.
Start Saving Early
Saving early is a great way to begin building your wealth for retirement. Experts recommend saving at least 10% of your annual income every year. So, if you are making $55,000 annually, you could save $5,500 every year, which translates to $458 per month. If that is not possible for you to do because you are spending a lot of what you earn, see where you can start cutting corners. Do you really need to eat at restaurants or get takeout as often as you do, or are there products and services that you can do without? Living modestly could make a big difference in how much of your income you are able to put aside, but if you still find it really difficult to save, consider a job change and use a resource like SalarySite.com to see what you can earn—and save—in a different position.
Put Your Money in an IRA
Another way to save for retirement is by putting your money into an IRA rather than in a standard savings account at your local bank. IRAs provide the perk of what is known as tax-deferred growth. This means that you will not need to pay any taxes on the money that you earn on the retirement fund until you actually reach your retirement age. And this also means that you will have the chance to reinvest your gains every year. What does that translate to in actual savings? Well, if you were putting aside $458 per month into your IRA, and if you had a 40-year term on that retirement account, you could end up with a whopping $1 million dollars when you are ready to retire.
Invest in Stocks
Working with a financial advisor could give you the tools and confidence that you need to enter the stock market for the first time. And, like other strategies for retirement, the sooner that you start, the better, as you’ll be able to increase your odds of earning a lot more money. When you make risky investments like this, you could get a much higher return on your investment than you would if you stuck only with safer, lower risk investments. Investing in the markets is a good way to grow your retirement savings rather quickly, but you do need to be aware of the risks and go about trading with caution.
As you can see, there are several ways that you can save up a lot of money for retirement even if you aren’t earning a lot. So, start today to reap the benefits of your savings tomorrow.