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How Can I Save for Retirement?

Retirement planning

Retirement, for many, can seem like a daunting thing to save for, especially if you’re looking at it not starting until several decades from now. It used to be that you could go work for a company for 30 to 35 years, retire and have a nice pension to count on. Unfortunately, that is rarely the case these days. Sadly, full paid pensions seem to be a relic of the past for many workers today. Retirement planning now requires active involvement on our parts, while being appropriately diversified so our portfolios can weather any potential storm in the stock market. That said, it is possible to save for retirement and make considerable headway.

Don’t Overlook the Free Money

It’s likely that one of the easiest and best ways to save for retirement is right under your nose in the form of a 401k. Most employers have shifted from offering a pension to a 401k these days which offers investments in a selected few mutual funds or ETFs. The beauty of the 401k is that many employers will offer a 401k match which equates to free money. Added to that, you also get to reap the potential tax benefits of having money taken from your paycheck pre-tax and thus not taxed. There may be different reasons why you’d not want to choose to invest in your 401k as you save for retirement, but be wary of not investing enough to get at least the match. There’s little better than free money, after all.

Save for Retirement With a Self-Directed IRA

Another great option to save for retirement is going with a self-directed IRA. There are various online brokerages you can choose from, all of which have their own ways of setting themselves apart. The nice thing with a self-directed IRA is that it immediately opens up your investment choices to anything in the stock market and gives you control over what you invest in, like with a SIPPS from Guardian Wealth Management. There are a variety of IRA’s you can have and they each have their own unique tax benefits, so make sure to speak with a tax advisor before making any decisions. Beyond that, make sure you’re comfortable with what you’re investing in, and if you’re not then you can never go wrong investing in some solid index funds that’ll help you stay with the market as opposed to trying to beat it.

Real Estate

Another option you can look at as you’re trying to save for retirement is real estate. I know this may sound a bit off, but hear me out. First off, I know being a landlord is not for everyone and it comes with its own set of challenges and risks but it can be a great way to further diversify your investing. If you’re able to stomach those challenges then using rental property for retirement can be a good way to produce some additional cash flow each month that can be invested as you continue to save for retirement.

 

Photo courtesy of: Tax Credits

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I'm the founder of Frugal Rules, a Dad, husband and veteran of the financial services industry. I'm passionate about helping people learn from my mistakes so that they can enjoy the freedom that comes from living frugally

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1 Comment

  • jim says:

    All good advice re: retirement planning, but I gotta tell you, if I was your age I would sooooooooooooooooooooooo step it up even further. I know – with kids, school loans, etc it seems impossible for you to do so. But I’m on the other side (just approaching retirement) and looking back. We busted our butts saving, living frugally, investing etc and we lost our asses (majorly) twice in the stock market – I’m talking hundreds of thousands of dollars (and this was with the advice of financial planners). We were able to get past those storms and we’ve made it up (but not the lost investment/time/compound interest). Now we’re watching our “time adjusted retirement plans” take another serious hit and we don’t have the time we had before to make this up in the market.

    Best of luck to all of you younger ones – ugh! We should at least be able to recoup some of our SS investments. I’m not sure you guys will be – if we get these assholes out of office who think they can print money all the time, then you’ll stand a chance, but until then, I worry about you guys.

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