How to save for retirement?

How to save for retirement?
Wood Blocks Spelling “RETIREMENT

How saving for retirement when you have a low income? This question comes up very frequently in the drafting of Finance de Demain. Today, we are going to think about it together in order to find a what to do.

If there is a tactic personal finances that almost everyone agrees on is the value of saving for retirement, or at least for your second act.

There will come a time when you no longer want to or can't do the work you're currently doing and moving on will result in a significant drop in your income. At that time, you will be happy to have every drop of savings. Life without retirement savings can be incredibly difficult. In this situation, finances can be a real challenge.

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Contributing to things like retirement can be hard to justify when you're worried about keeping the rent paid or the menacing noise coming from your car or making sure everyone has enough to eat.

But how do households with relatively low incomes save for their retirement? In this article, I bring you some answers to this concern.

However, if you purchase my training on Master your personal finances Volume 1 or Volume 2 of this training, you will learn more about how to reduce debt in 21 days or simply how to reduce your financial stress.

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???? Start now. don't wait

In terms of retirement savings, it is better to save even a very small amount now than to wait until later.

Save as much as you can whenever you can, even if that amount you can save now is only a few dollars a week.

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Why is this so important? This is because of the power of compound interest.

Let's say you're going to retire at age 70 and by then your retirement investments will be earning 8% per year.

Let's take an example

Suppose you can only afford to set aside $500 a year – literally $10 a week, with a two-week break.

  • If you start doing that at 40, you will have $50 savings for retirement.
  • Starting to do that at 30, you will have $160 savings for retirement.
  • If you start doing that at 20, you will have $370 savings for retirement.

Why is there such a big difference? It's compound interest. If you invest your money and let it sit there and grow, it will grow faster and faster the longer it stays.

So, the sooner you start saving, the more time you give it. If you choose to wait 10 years, you lose a lot of growth. Everything is simple: act now, even if you can only take small steps.

???? Prioritize your day-to-day finances

The most important first steps you can take aren't about retirement savings at all. They involve straightening out your daily finances.

There are probably already financial obstacles in your way that make it difficult to save effectively for retirement, so take care of them as soon as possible.

First, pay your high interest debt. Any debt you have with a double digit interest rate should go away. Credit card. Payday loans. Get rid of them as fast as you can.

Second, create a cash emergency fund. Stop relying on credit cards or payday loans for emergencies. Start putting money into a savings account somewhere – and if you don't have one or can't get one, start saving it at home for now.

Eventually you will want to get a savings account in a bank, which you should be able to do once you have accumulated some money.

How can you afford to do these things? Live as cheaply as possible. It's fine to relax and indulge, but explore ways to do that that don't involve money leaving your pocket.

Splurge on long walks without your cell phone. Invite a friend to do something for free. Lose yourself in a library book. Don't splurge by buying stuff or paying for experiences.

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???? Start small and automatic

Once your day-to-day finances are stabilized, slowly start saving. You don't need to contribute thousands of dollars a month to retirement. In fact, it will likely destabilize your finances and put you in a worse situation.

Instead, start by contributing what seems like a very manageable amount. Go low, not high. If you think you can manage $10 a week, save $10 a week. If you can handle more, do it, but don't insist.

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You're better off saving a small amount and keeping your daily finances stable than trying to save too much and ending up in trouble. Whatever you decide to save, make it automatic. If it's through a work plan, have it automatically deducted from your paycheck.

If it's your own plan (see below), have it automatically withdrawn from your checking account each week. You don't want to have to think about it, otherwise you'll find ways to talk yourself out of it. Start small, start automatically.

???? Increase your savings when your income increases

If you get a raise, use part of it to increase your pension contributions.

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For example, if you earn $1 an hour more than before working 35 hours a week, increase your dues $5 or $10 weekly. You still take home more than before, but you also save more.

saving for retirement

As you earn more, you'll naturally pump up your lifestyle a little, which means you'll want to save more so you can maintain a better lifestyle in retirement.

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So every time you get a raise, set aside some of that raise for the future. Simply change your automatic contribution each time your salary increases.

???? Take advantage of savings credit

There is actually a very interesting but little-known tax benefit for low-income people who contribute to retirement savings. That's what we call the saver's loan and it will really help at tax time.

Provided that you are over 18, you are not a full-time student and are not claimed as someone else's tax dependent, you can get a credit of up to $2 in pension plan contributions, both through professional schemes or your individual scheme.

???? In summary…saving for retirement

The most important part of preparing for retirement if you don't have a high income is to stabilize your expenses and get your finances in order, but you need to do this now rather than later.

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The sooner you start, the sooner you can contribute to your retirement savings, and the sooner you start with it, the more it will grow on your behalf.

Now if you want to deepen your training on preparing for your retirement, you can click on this affiliate link to buy a training that I considered very complete.

Moreover, as I explained to you in one of my articles, it is this training that allowed me to set up my retirement plan.

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