Most experts agree that the right time to start saving for retirement is in your twenties. Saving a small amount in your twenties adds up to a significant sum by the time you are 65 and ready for retirement. As soon as you secure employment that allows you to pay your expenses and save for the future, you should start putting money away for retirement. Here are some tips that you can use to get the most bang for your retirement saving bucks.
Live On Less Than You Earn
Many people make the mistake of increasing their expenses as their income grows, often leading to living paycheck to paycheck and having very little left over for savings. Creating a budget that allows you to live on less than you earn and sticking to that budget even when your income increases will put you in a much better position to save a considerable amount for your retirement years.
Take Advantage Of Matching Contributions
If your employer offers a retirement account with matching contributions, take full advantage of it. After all, it is free money for doing nothing more than making sure you will be financially secure in the future. Most employers that offer matching funds do so for up to a specific percentage of income, so try to contribute at least this amount so you can receive the full amount of the matching funds.
Bank On Compounded Interest
The reason that retirement accounts can grow to such a considerable amount over the years is that the accounts take advantage of compounded interest. Compounded interest is when the interest earned on the account earns interest in turn, helping the balance of the account grow faster than it would from contributions alone. The longer you leave your retirement savings untouched, the more you will have to fund your retirement years.
Save Any Additional Money Above Your Regular Income
Many people receive additional money throughout the year in the form of raises, bonuses, tax refunds, and gifts. Banking this money instead of spending it will go a long way towards boosting your retirement savings. While the temptation to spend it will be great, just think of how awesome it will be to be able to retire on your own terms and have the money to do what you want during your retirement years.