The most important reason for us to save, budget and
invest is to prepare for our retirement. How many of you are actually saving
for your retirement? And how many of you have to save just because of mandatory
government saving policy? Well, I think many of you. But retirement plan is
necessary today as it determines what standard of living you will live when you
retire. To do this effectively, you need to define at what age you are planning
to retire and what standard of living you want to live. You hope to live with
it your kids or by travelling around the globe. If you know your goal, you will
be able to find out how much you have to save/invest and for how long?
Most countries have tax break targeted specifically
to retirement investments and savings. So it is highly recommendable to take
advantage of it because it saves your tax. As tax rate is tied to your income
which is higher during the peak employment period but the retirement plans are paid
before taxes. So it saves your high portion of taxes. Here are some more tips
regarding your retirement plan:
· Start
saving: Start saving money because sooner you start saving,
the more time has money to grow. Make saving for retirement a priority. Remember,
it’s never too early or late, to start saving.
·
Contribute
to your employer’s retirement savings plan: if your employer
offers you a retirement savings plan, then stick to it because it will lower
the taxes and plus the employer will also contribute to it. Find about the plan
i.e. how much you have to contribute and for how much time?
·
Consider
basic investment principle: How you can save is
equally important as how much you can save. Always put your money in different
investments as there is less risk involved in that. You can’t compromise with
your future. So it is recommendable to invest money in less risky investments.
· Don’t
withdraw from your retirement savings: If you withdraw money
from your retirement saving account, you will lose principal and interest and you
may lose tax interest benefits too.
·
Put
your money into Individual Retirement Plan: If you are 50 or
younger than 50, then you can put you up to $5500 and if you are older than 50,
then you can put even more. IRA account provides great tax advantages. Follow this
link to know more about IRA account:http://en.wikipedia.org/wiki/Roth_IRA
Here are some more tips on retirement plans:http://www.forbes.com/sites/lawrencelight/2013/02/04/the-3-best-retirement-tips-of-2013/
Here is what every Canadian needs to know-->
References:
- http://www.forbes.com/sites/lawrencelight/2013/02/04/the-3-best-retirement-tips-of-2013/
- http://www.dol.gov/ebsa/publications/10_ways_to_prepare.html
- http://www.cartoonstock.com/directory/r/retirement_plan.asp
- http://selfhelpmagazine.com/psychtoons-archive?page=4
