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Top Strategies - Saving For Retirement



Top Strategies for Saving for Retirement

Pension plans serve as a valuable tool to mitigate taxes on substantial amounts, but they may fall short of providing complete retirement coverage. To secure a comfortable retirement, it is crucial to supplement pension plans with personal savings and strategic investments.

Find the Right Savings Account

When you're saving for retirement, you have one important feature on your side: you won't be touching that money for years, and that can secure you an excellent interest rate. Some accounts offer as much as 10% on fixed deposit accounts—and that's higher than your average low-risk investment. The sheer size of the returns you can make on years of savings demands a careful search for just the right account. Saving for retirement might just earn you a significant sum in interest if you do your due diligence.

Don't be Scared to Negotiate

Few people realise that bank terms are negotiable. Retirement savings typically stay with a single bank for years, or even decades, and those are exactly the conditions your bank manager loves. That gives you significant negotiation power, so when you visit your branch, take the best available interest rates with you. If you know what other banks are paying, it'll be far easier to gain the upper hand when you negotiate for better terms.

Build an Investment Porfolio

Saving for retirement needn't entail actual savings. Not if you build a balanced investment portfolio that can earn you more than a fixed-deposit savings account. A portfolio should entail less risk the closer you get to retirement age, so if you're in your 20s and 30s, you can afford to invest in a few high-risk, high-return stocks. If you're approaching 50, though, it's time to pare down to something more reliable.

Use Property Wisely

When your property is fully paid off, it's the perfect vehicle for collecting a fixed monthly income in the form of rentals. Property is more than just a passive income opportunity, though. It's also one of the steadiest investments you can make. Land almost always regains its value if there's a slump, and in those in-between years, it remains a way to hold onto your financial security. Nobody can take a fully-paid home away from you.

Create a Goal

Saving for retirement is best done with an exact figure in mind. You wouldn't shoot a target with your eyes closed, and you shouldn't save without goals, but how much is enough? First, you'll need to factor inflation into the equation. This should give you an accurate monthly amount that you can survive on. Most 401 (k) participants think they need $1.7 million to retire, but everyone is different. Ideally, you'll need around 80% of your pre-retirement salary, but that number should be adjusted up and down to make room for your pension, social security, and debt. Don't assume you'll have all your credit cards and loans fully paid off by the time you retire. When you plan for retirement, it's best to hope for the best, but plan for the worst. You won't regret saving too much, but if you end up with a shortfall, there's little you can do to compensate.




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