People are living longer than ever, and with that come certain additional responsibilities. The way to save up for retirement has changed a lot, as have the tools for investing, real estate, and other financial services to help secure future stability for you and your family. While the age of retirement has not gone up significantly, people are now regularly living well into their eighties and nineties, meaning that the next few generations need to be prepared earlier than ever to live longer.
There are a few different ways to go about saving more without too much of an effort. Hiring a financial advisor is always sound advice, as they can help you navigate the complexities of financial planning – especially as one gets older. Even if young and unable to afford a financial advisor, there are a few different ways you can help prepare for retirement several decades in advance. Here are a few of the most helpful hints gathered from professionals.
- Avoid unnecessary debt. Credit cards might seem convenient and help out in cases of emergencies, but avoid opening too many or driving up balances too high. Credit bureaus look carefully at the limit of revolving credit open and being utilized and lenders make their decisions based on those figures. The first piece of advice that a financial advisor will give you is going to be to pay down any credit card debt. Student loan debt and mortgages are considered good debt and need to be in good standing of course, but there is no rush to pay those off.
- Open a 401k as early as possible. If your employer offers one, open it immediately. If they do any matching of funds, put in enough to be able to maximize the employers’ contribution. If possible, add in an extra one or two percent as well.
- Once the 401k is opened and a good plan is established for paying down debt, make sure there is an aggressive plan made to save up enough money to have several months’ worth of emergency funds in the bank. Then and only then should you start to plan for investing or real estate with any additional funds, or else contributing more to a regular liquid savings account or additional funds into retirement accounts such as your 401k or an individual retirement account (IRA).
- Once things have stabilized financially in life, such as paying off credit cards and finally earning a little more money, then there is more room to consider investing in the stock market, for example, or saving up for a down payment on a home that will appreciate in value. Financial advisors have a few set rules, but generally speaking they follow in this order. Pay off debt, save for retirement, save for emergencies, and then begin investing. Once you get to the point of investment, there are a lot of different options worth exploring and there are many financial advisors, such as Legacy Financial Services Group, who can help you figure out which options are the right ones for you.