Five tips for saving more for your retirement
Most people try to save money for their retirement, but not all of them manage to put aside enough funds. Meanwhile, some prefer to depend on their Social Security income. The latter offers approximately $20,000 annually, which means only a $1,673 monthly amount. If you want to have more income after you retire, you need to find ways to save.
However, it seems most people are wholly unprepared to plan their future finances. The 2022 Retirement Confidence Survey showed that 33% of employees had saved $250,000 or more for retirement. That means 67% of people don’t have much to depend on in their elder years. In some cases, such neglect may be due to low salaries. Fortunately, there are other ways to get funds for saving.
How can you do that?
One of the obvious ways is to find a part-time job. You may consider it tiring, especially if you already work full-time, but it is a fine way to generate more income. Explore the opportunities around you, and you may find a job that won’t become a burden. Instead, you may even come to enjoy it. There are numerous new things to try out. And they will keep you from everyday life’s boring routine. Besides, you will benefit from such a job greatly. If you work 12 additional hours a week and earn $15 per hour, you will save approximately $780 per month, pre-tax. In a year, you’ll have $9,000. Imagine how much you would save at this rate in ten or twenty years.
Collecting interest on your saved funds is another way to add them. Over the last years, the banks kept their interest rates ultra-low, which meant that you couldn’t gain much in such a way. However, that’s changing now. The banks are hiking rates, and people have a chance to profit from new arrangements. For example, if you have been getting 2% interest for $20,000, now you can get 7%. Instead of a measly $400 per year, you will get $1,400 simply for letting your money sit in the bank account.
Furthermore, you can try buying an annuity if you have already approached your retirement and managed to save some money. There are different types of annuities. Fixed ones are simpler, while variable or indexed ones are more complicated. But you can learn more about how they work to choose the one that suits you. That’s a great way to manage your finances, considering that some annuities pay you every month for life, starting immediately or in the future.
What about the dividends?
Some economists think that investing in dividend-paying stocks is a great income-generating strategy. In this case, you will need to pay a big chunk of money, much like annuities. But if you choose the right dividend, it will prove a very advantageous step. Moreover, you have to pay a sum of money to buy an annuity, while you don’t forfeit your funds with dividend-paying stocks. Instead, you get both dividend payments and retain your money. Still, there is one drawback – annuity payments are usually guaranteed, while stock prices often fluctuate, and there is a chance for them to tumble down. Despite such risk, a good dividend can bring you great profits.