| How to Keep Saving for Retirement and Ignore Economic Indicators |
| Articles - Retirement |
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It's quite common to base a retirement savings plan on the vacillations of financial markets, but this urge should be curtailed. Just because there is a bull market and it seems like the time to invest (and not save) has arrived, the best strategy is to make an extra contribution to a retirement plan and invest modestly. Too often the selling begins when prices start heading south.
It's quite common to base a retirement savings plan on the vacillations of financial markets, but this urge should be curtailed. Just because there is a bull market and it seems like the time to invest (and not save) has arrived, the best strategy is to make an extra contribution to a retirement plan and invest modestly. Too often the selling begins when prices start heading south. Saving for retirement should never be something dependent on the performance of certain stocks and other economic indicators. In the end, all that will be left is an individual's nest egg, or the lack thereof. So how can you continue saving for retirement despite the crunch in other areas of life? There are five great ways to continue your march toward a retirement you will truly enjoy. 1. Keep the percentage of money saved versus money earned intact, no matter how much your income may waver. Whatever percentage you have calculated to be ideal, it will probably seem ludicrous when you can barely pay all your bills. Nonetheless, it should be a time to cut out all the other expenses. Retirement funds should never be compromised. Keep in mind that goal when your career is over, and all the pleasure you plan to take in stepping out of the workforce. 2. Table the debt servicing for a slightly later date. When income starts to diminish, it's common to start buying more on credit. This trend will lead to increased guilt and could end up tugging at funds normally reserved for retirement savings. However, the best plan is to let the debt rest for a little bit while your income improves. Keep the money going into a retirement plan, as the benefits of that diligence will outweigh negatives of short-term interest accumulation. 3. Double-check your original figures. For many people, some inaccurate calculations early on have led to overpaying retirement funds. At the end of the process you will end up being a target of the tax man rather than being able to enjoy all your savings. Don't go overboard: Calculate the expenses you will probably have and stop in that zone. You may be shortchanging yourself today and later on. 4. Don't be constricted by any arbitrary guidelines. While the traditional line of thinking is that age 65 is the time to quit, some unfortunate swings in the market may make that proposed date inconvenient. If so, you could see immense benefits in working until age 67, or staying on part-time for several years. It may be a way to ease out of the social circle of work while securing your retirement savings for good. 5. Always take advantage of tax protection. Saving for retirement should always include a measure of care in the tax department. Though so many people are letting the possibility of a tax-protected plan go to waste, you shouldn't do so. Having funds taken out of your income automatically is a great way to get it done without effort. Compromises will have to be made in several areas of life when times get tough; don't let retirement savings be one of them. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Gnifrus Urquart realized you must begin planning for retirement early. This is why he started his own DIY superannuation and looks to Premier for Self Managed Superannuation Administration. |