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If you’re over the age of 40 and haven’t started a retirement plan yet, then you’ve probably started worrying about your financial future. The good news is that there’s still time for you to salvage your golden years if you take a hard financial stance now. There’s no need to find the highest ledge to jump off of, but there is a need to sit down and make some serious financial plans for your future. Here are a few tips that you’ll definitely need to consider.
How Much Will You Need?
You need to sit down and come up with a realistic dollar amount that will cover your post retirement expenses. You need to calculate how much money you’ll be getting from Social Security and any other sources of monthly income that you may have. Other sources might include a pension or trust fund. Don’t get hung up on having exact numbers. You need to get a rough number and be generous.
Invest in a Retirement Plan
Many will tell you that it’s too late for this. I say hogwash! If your company offers a 401K plan, you need to maximize your monthly contributions. In fact, there are certain restrictions lifted for 401K contributions if you’re over 50. Even if there is a zero match, you’ll still benefit from the tax savings. If your company does offer a match then this should be a no-brainer. Take the free money that they offer to you. If you have an acceptable income level, in addition to the 401K you need to fund a Roth IRA. Although the Roth IRA contribution isn’t tax deductible, the money that it makes for you will be tax free after retiring.
Get a Supplemental Income
A supplemental income can be in the form of a second job or a side business (which incidentally is also tax deductible) to bring in some extra cash. When your supplemental income begins generating cash, be sure that you don’t use all the funds toward leisure spending. Besides, you’ll have plenty of time for leisure spending when you’re retired.
Minimize Your Current Debt
It’s time for you to stop making the minimum payments on those credit cards. This is killing your financial portfolio and will devastate your retirement planning. Also, now’s not the time to go out and finance a new car. Make do with what you have and eliminate all unnecessary spending. Eat out less and you’ll be shocked by the amount you save.
Downsize Your Home
Many people who are nearing retirement age have large homes that have empty rooms from all the kids that have moved on to their lives and families. Take advantage of you large living space and consider selling it and moving into something smaller and cheaper. Not only will you earn money on the sale, but you’ll also succeeded on reducing your utility costs. If feasible, you might also consider renting your home out if you can rent it for a profit including the living expenses of your smaller home.
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