- January 20, 2022
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The start of the year is the perfect time to make sure your finances are on track for a comfortable retirement. We all know we should be saving for our golden years, but it can be difficult to get motivated to spend less NOW to build a nest egg for the FUTURE. These strategies may help you to make better decisions in 2022 to prepare for your retirement.
Stop those bad financial habits. It'll be easier to save money for retirement and to live comfortably once you get there if you reduce your debt now. Find creative ways to reduce unnecessary expenses and use the funds you save to reduce debt - like high-interest credit cards.
Matching Employer Contributions. The fastest way to build a nest egg is to get some help from your employer. If your employer has established a retirement plan for your company, join and maximize any matching contributions. A worker who saves $2,000 for retirement and gets a 50% employer match on that amount will add an additional $1,000 to his nest egg. That’s a better return on an investment than you are likely to get anywhere else. Also, consider making additional voluntary contributions into your pension plan.
Open an RF Personal Pension Plan (“PPP”). Unfortunately, Employer-Sponsored Pension Plans are not mandatory in some jurisdictions. However, this should not prevent you from taking charge of your own financial future. A Personal Pension Plan is an investment tool you can use to help you grow your retirement savings. Find out more about it here.
Review Your Investments. The value of your investments likely changed in 2021, so your current mix of assets may now be quite different from your target asset allocation. Consider shifting your assets back to an allocation that is in line with your current goals and risk tolerance. It’s also crucial that you revisit the investment options in your employer-sponsored retirement accounts and, if possible, shift those allocations toward well-diversified options.
Build an Emergency Fund. Make sure you have funds available just in case something unexpected happens. Consider saving whatever amount you can now —whether it’s $100, $50, or even $25 a month—until you have at least one month’s pay saved. Doing so will reduce the need for you to tap into your retirement savings in the event of an emergency.
Don't wait to save. The money you deposit in a retirement account will eventually be worth much more than the amount you contributed if you allow the account to accumulate for decades. Due to compound growth - or earning interest on your interest - contributions made early in your career have the potential to generate large returns by retirement. Saving even a small sum early and often - especially when combined with an employer match and compound interest - will put you on a path toward a more financially secure future.
Make a retirement checkup appointment. If you’re not sure you’re on the right road to a comfortable retirement or if you’d like to open a Personal Pension Plan, reach out to me at cleora.farquharson@rfgroup.com, or call RF to schedule an appointment with a Retirement Specialist.