Nowadays, the idea of being able to retire seems so far-fetched that many simply neglect it altogether. However, it’s important to remember that retirement savings over the course of your working life will have major benefits to being able to retire comfortably. Rather than just giving up, there are several things you can do today to plan for retirement and ensure you will have enough money to take care of yourself in the future.
Figure Out How Much You Need To Save
The biggest and most important step is determining how much money you’ll need to have to be able to retire. The good news is social security benefits begin at 67 and will help supplement any money you’ve already saved. However, it will be important to put away money every month into either a retirement account, investment fund, tangible goods, or simply a savings account. Of those four, tangible goods, and long-term save investments will yield the highest returns.
Either way, most experts recommend saving at least 10% of your monthly pretax income for retirement. For example, if you make $1,000 a month then you need to put $100 into a retirement account every month. In other words, the average American makes $31,000 a year which you’d need to put away $258 a month every month of the year. Experts also suggest you’ll want to have around $1.7 million in retirement funds by the time you hit 65-67 as well. You may then notice your $258 a month won’t quite cut it, the good news is those saved funds can grow over time as well.
Investment retirement accounts
The most common type is a 401k, however many other types of retirement accounts also exist. The biggest caveat is that you’ll need to pay large sums of money to withdraw your 401k or retirement account earnings until you hit the age of 65-67. The advantage is that you’ll have a safe long-term investment that will see year-over-year returns for as long as you have money in the retirement account. The average retirement account return per year is 8-10%. This means for every $258 you put into the account, you will make an additional $25 which then compounds the next year. In other words, your returns may stay at 10% every year, but the actual value of your account will increase in larger amounts year after year.
Tangible goods for retirement
Aside from 401k’s and savings account there are two things that have consistently gone up in value over time and are predicted to keep climbing at least for the next several generations. Land and gold are two tangible “goods” which hold their value well. For instance, the average price of one acre of land in 1970 was $197 in the United States as opposed to $7,599 per acre in 2021. That same trend is expected to continue well into the next several generations as land becomes more contested and used. Gold also holds the same properties as most gold on earth is already mined, yet the demand for gold continues to increase over time. This means the price of gold per ounce now will be less than in the future. Then once you hit retirement age, you sell off those tangible goods for a large profit and enjoy retirement.
Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.