Your retirement should be something to look forward to, a time when you can finally stop your toil and get on with the things that you always wanted to do. Unfortunately, retirement is coming rather late for many people today. This is largely to do with a lack of financial security. If you want to retire comfortably, you are going to have to do some sound financial planning. Here are three tips for achieving financial security in retirement.
Start Saving Early
The best way to ensure financial security in your old age is to start saving when you are young. Not only will this mean that you have more time to pay into a plan, but it also means that your savings will be maximized thanks to compound interest. Compound interest accumulates based on the total accumulated amount of money in an account. If, for instance, a saving account is offering a 6 percent rate of compound interest, then a person who starts regularly saving at 22 can realistically expect to retire at 67 with double the amount of money as somebody who started paying into a saving account ten years later at 32.
Invest in an Annuity
Another way of managing and maximizing money for your retirement is to invest in an annuity. Annuities are a kind of insurance. You invest your money in an annuity, and the provider agrees to pay you installments of your money plus interest and investment profits until you pass away or until a predetermined time. Even if you run out of money, annuity providers guarantee that they will still payout to you at a loss – which is the primary reason they are popular. Click here to find annuities online. There are two major types of annuity for you to consider.
Fixed annuities are the simplest option. A fixed annuity provider will agree to pay a prearranged sum to the purchaser once a year or month. These annuities do not take inflation into account and typically accumulate value through interest alone.
Variable annuities are more complex. The value of a variable annuity changes based on the performance of an underlying portfolio of sub-accounts. Annuity providers will invest your money in several places.
Opt into a 401k
Many larger companies in the United States offer 401k programs. If you get a chance, you should opt into one of these. 401k programs essentially enable employers to automatically deposit a certain amount of your paycheck into a savings account. If you are really lucky and work for a great employer, they may well even offer to match your savings. This is typically a tactic used by employers to tempt people to stay at their jobs for the long haul. Automation is your friend with a 401k. In many cases, you will have the option to increase the size of your payment into the account every year. If you get this opportunity, you should take it.