Pro Saving Tips for Beginners

The global economic downturn hit America hard, and its ripples are still being felt today. There are many people out there who are out of work, and those who do have gainful employment are concerned about overall job security. Add to that the fact that total U.S. credit card debt for individuals and families is currently at $793 billion and the reality becomes clear: money and security are often in short supply.

Which is why it is even more important to plan for the future. Those who do have work and minimal debt need to be thinking about putting together a nest egg comfy enough to support them during their retirement years.

Yes, many statistics now predict that this generation of workers will have to remain employed into their 80s, but the future isn’t written yet.

So here is what people can do now to ensure they don’t wind up working that daily grind well into their golden years.

Sniff Out Free Money

It may sound like an oxymoron, but free money is out there – people just have to know precisely where to look. For example, those with a bit of cash to put away may think that opening a retirement account that earns five percent interest annually is fair.

But if this same account could earn 20 percent, that would obviously be preferable. What workers can do is check with their employers to see if the company offers an employer-match on retirement accounts, which many organizations do.

If workers can score this deal, then they should concentrate on putting 15% of their gross income away into this account every year. Matching contributions are powerful for two reasons. First, they’re like getting a raise without adding to your workload or responsibilities. Second, they help you live below your means because the money is paid to your retirement account, not your bank account.

Build a Portfolio

Yes, the “creative bookkeeping” and dubious loan offers perpetrated by Wall Street insiders have been well documented over the years. But that shouldn’t be any reason to keep the average young person planning for his or her future from dabbling in the market.

Professionals recommend building a portfolio that focuses on mutual funds, stocks and index funds over bonds. That said, bonds can be a factor in a person’s portfolio, but the percentage should correspond to his or her age. That means a 30-year-old newbie investor should have no more than 1/3 of his or her portfolio made up of bonds.

A Tax-Free Retirement

One of the reasons Roth IRAs – and Roth 401ks — have become popular retirement investments is because they allow the user to pay taxes the same year they put the money in. This means that none of the money they receive upon cashing out goes to Uncle Sam, and can be spent any which way the investor so chooses. Those who want a bit of flexibility with their retirement funds can opt for a 50% regular/50% Roth IRA plan.

By considering the above options, those looking toward the future should find a system that works for them. The end goal achieved from these methods should be a retirement sooner rather than later.

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