Planning for retirement can seem like a daunting task, and many Americans are unsure of where to start. In addition, recent reports have shown growing numbers of people who will not be ready for retirement, and who find themselves unable to cover basic expenses when they get there. Bob Wamhoff, President of Wamhoff Financial Planning and Accounting, identifies the top three things investors can do to help them reach their retirement goals.
1. Put money into your 401(k) – until it hurts!
- Pre-tax dollars taken out of your paycheck lessens the financial impact you’ll feel today
- Allows you to take advantage of employer matches, which in essence, equates to “free money” going towards your retirement
- If you’re unable to make a large contribution, contribute at least as much as the employer match
2. Get your debt in order.
- Ideally, the only debt you should have is your home (your primary residence)
- Create a realistic budget for yourself, and stick to it
- Make a plan for paying off credit cards, and limit your use of the cards to what you can pay off each month.
- Save and pay cash for larger purchases where possible, or take advantage of low interest rates where available, and where it makes sense.
- Diversify all of your retirement savings – those within your 401(k) as well as other IRA’s and savings plans you may have
- Consider options that are in and out of the market, as there are a variety of alternative investment options that are not tied to the ups and downs of the market
- When in doubt, consult a professional