Saving and investing for tomorrow isn’t always the easiest thing to do – particularly when you’re not sure about getting through today. But you can’t let that stop you. By taking some small but effective steps in the right direction, you can set yourself up better for the future.
MAKE ROOM FOR RETIREMENT:
Okay, you’ve got bills to pay. And you want to put some money away for the holidays – and maybe even a short vacation. But you have to make room on that list for retirement. If you aren’t saving now, start small. Consider signing up for a defined contribution (DC) plan-like the FPPA 457(b) Plan- and contribute a percentage of your income that’s manageable (aim for whatever’s needed to meet your employer contributions, if one is offered). Keep in mind, if you withdraw any money before you hit age 59½ (with certain exceptions) you will face a 10% penalty and have to pay income taxes on the withdrawal.
BUMP IT UP SLOWLY:
Every six months, or whenever you get a raise, consider increasing your contributions to your DC account by 1 – 2%. If you work for an employer who offers matching dollars on your plan contributions, this is especially key. You don’t want to leave “free” money on the table.
STRATEGIZE TO FIND EXTRA SAVINGS:
If you’re having trouble meeting your savings goals, take the time to track your spending for a month or so, to see where your money is going. Look for places you can cut back. If your credit score is good, try to reduce the interest rates you’re paying on your credit cards and other debts.
TAKE ADVANTAGE OF WINDFALLS:
Got a tax refund? A small bonus or inheritance? Think of these as opportunities to pad your retirement accounts. The key: put the money to work before you think about spending it.
KEEP AN EYE ON THE MONEY YOU’RE INVESTING:
Review your investments once a year to make sure your asset mix (mix of stocks, bonds, and short-term investments) still lines up with your goals. If you find it hard to regularly review your investments, you may want to consider a single-fund solution, typically a target date fund or target allocation fund. Or consider a managed account, where investment professionals will handle your investments based on your personal situation.
DON’T GET BOGGED DOWN BY YESTERDAY:
The biggest financial regret many people have is that they didn’t start planning for retirement earlier. Get over it. Then get going. By doing something today, you already put yourself in a better position for tomorrow.
Ryan Woodhouse is the Content and Publications Manager for the Fire & Police Pension Association of Colorado. When not creating content for FPPA, Ryan can be found fly fishing in the Colorado high country or shouting at the TV during University of Wisconsin football and basketball games.