If you want to retire in comfort after all those years of hard work, you need to start saving early. It is very important to save a portion of your income without fail if you want to maintain a good standard of living after retirement. How much you save depends on your salary, job-stability and expenses, but once you’ve decided on a particular percentage of salary, always stick to that percentage.
You should remember that you can save a much higher percentage of your income when you are in your 20’s and early 30’s. This is because you might not have dependents and your expenses will consequently be lesser. Financial experts say that working professionals in their 20’s and early 30’s must save about 25% to 35% of their income.
You should also contribute more to your 401(k) and save any bonus that you get from your company. Make sure you pay off all those college loans as quickly as you can. Do not splurge on expensive gadgets, cars and designer brands even if you have of a good income, until you are already meeting your savings goals.
If you are in your late 30’s and early 40’s, you need to save at least 10% to 15% of your income. This is the period when expenses increase as you might have kids. It will be more difficult to build savings in this period, but you should plan your budget carefully and always adhere to it. Involve your spouse and children in the budget making process.
Apart from setting aside money, you can consult a financial advisor on investments, taxes and other ways of saving or growing your money. For example, investments in equities and bonds can yield substantial profits, so make sure you have a low-risk portfolio of stocks, bonds and mutual funds.
As a family, you can look to save money by collecting coupons, shopping in stores that give you good deals etc. You should also teach your kids the value of money. Encourage them to take up work during summers like delivering newspapers, walking dogs etc. This will make them self-sufficient at an early age and they will learn how to earn and spend money.
Retirement is a time to relax with family, indulge in recreational activities and travel. Make sure you keep aside a sum for travelling expenses and other activities that you want to indulge in.