Recently, the news has been rife with information about the coming social security crisis. While it has always been looming, now that the crisis is less than a decade away, many individuals are realizing they may not be able to rely on the government for their retirement benefits.
If this is you, don’t panic, as there is a lot you can do now to help put yourself in a better position for retirement—especially if social security is limited or pushed off until later.
Read on to discover some of the best basic tips for investing for retirement.
Related: The Pending Social Security Crisis in America
7 Tips for Saving for Retirement
1. Get a Retirement Account
Unfortunately, there are many Americans who are planning to rely solely on social security to provide for them during their retirement years. While this would be nice, sadly, we can no longer rely on this option.
Plus, social security isn’t enough to live on for most people. In fact, it barely covers basic living expenses in a small American town. If you want to retire in the big city or have other bills, you’ll want to plan now for extra money to fund these lifestyle choices.
Even if you are well into your working years, it is never too late to open a retirement account. Set one up through your work (if it’s an option) or with your bank. Even if you can only contribute $100 per month, this can go a long way toward providing for you in the future.
Related: Can You Add Bitcoin to Your Retirement Account?
2. Don’t Put Off Big Purchases
Do you want to buy a house but keep thinking that you will save for a larger one or a market crash? Don’t do this. Most mortgages are for a 30-year term, and if you are already nearing 40, then this means you could be still paying on your home when you enter retirement.
Even if you have to end up compromising for a smaller place, buying a home now that you can retire in is important, so you have time to pay it off before you retire. The last thing you want to do is be planning on paying a mortgage when you have a fixed income.
One of the top tips from individuals who choose FI (financial independence) is having a place which is paid off to live in, so you don’t have to worry about rent when you’re in your later years.
3. Invest
Of course, in addition to saving for retirement, you should also be investing. The types of securities you should invest in, however, will vary based on how close you are to retirement age.
For example, those in their 30s have several decades before retirement and can consider higher-risk investments like cryptocurrencies and stocks. But those who are already in their 50s with only a decade to go should choose something less risky, such as bonds.
The answer to what you should invest in is truly unique to your situation, so you’ll want to speak to a financial advisor to decide.
**Before investing in anything, definitely check out the cost of the platform you plan to do as well as the fees. The last thing you want to do is get all set up with an account you like now but find too expensive to withdraw from in the future.
4. Pay Off Debt
We know, we just told you above to take the time to get a mortgage, but another essential aspect of preparing for retirement is paying off debt now while you have an income you can more easily influence if needed.
This means if you have student loans or medical debt, it’s better to take on a side gig now and work on paying them off. Yes, this isn’t fun when you are in your 20s and just want to have fun, but it is much harder to do the same later when you are older and have kids.
5. Plan to Work Longer
Yes, this is the second item on our list that sucks but know that the US government is reviewing several options to stall the coming crisis. One of the favorite propositions is raising the retirement age from 65 to something higher.
While this doesn’t mean you’ll have to work longer, know that you might, and you shouldn’t count on being able to walk out the door on your 65th birthday anymore.
6. Know How Much You Should Be Saving
The general recommendation for saving for retirement is to save 10%-15% of your income. While this can seem tough, especially if you don’t have a great career yet or have lots of children, know that you should work to get as close to this number as possible.
If you find you don’t have enough money to put some away each month, it’s time to review your spending habits. You’ll find that reducing unnecessary spending now will be well worth it in the future.
7. Consider Retirement Benefits for Jobs You Apply For
Last, but not least is that as someone who is of working age, you should inquire about retirement benefits at any job you work at. Some companies will contribute money to your retirement, while others will pay out a retirement themselves (usually a government program).
Either way, you’ll want to familiarize yourself with the retirement policies that companies in your industry are offering. Remember, almost everything is negotiable, and a decent retirement is something worth negotiating for. So, take the time to do a little research, and you’ll be surprised at how far you get!
Overall, it can be scary to think about retirement and the fact that social security won’t be viable in a few years. But not thinking about the problem won’t make it go away. Therefore, even if you are only able to take one or two of these steps today, start doing so. This way, you can ensure that when you retire, you’ll have something to cover your costs if the US government won’t.
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