Retirement (Photo credit: 401K)
The following is a guest post from Louise at Money Supermarket
Retirement should be a time to relax and enjoy life. You’ve put in the hard work and now it is time to do things for yourself.
To get to this point in life, it is important to build a solid financial retirement. The best way to set yourself up financially is to start saving right away. No matter what your age or financial status, saving up for retirement now can make the difference in the type of retirement you get to experience.
ISA and Employer Programs
One of the easiest ways to start creating a solid financial retirement is to take advantage of an ISA. You can put away money each year and the financial gains go untaxed. Money that is put away continues to grow over the course of your life.
There are two types of ISA accounts. The cash ISA has a lot in common with a traditional savings account. The money grows with a set interest rate. There is no risk and the return is typically steady. This is a great way to get some cash without worrying about the risk of an investment. Keep in mind, however, that there is a yearly limit to the amount a person can contribute.
The stocks and shares ISA involves taking money and turning it into an investment. Some investments are riskier than others and there is a chance that the money will increase or decrease over time. While there is greater risk, the return could potentially be much more than that of a cash ISA. Many people choose to place money in both types of accounts.
Take advantage of a retirement plan offered by your employer, especially if they offer to match any part of your contribution. This can be counted as part of your contribution percentage or you can look at it as an extra deposit into your account, above and beyond what you are saving. Be sure that you find out what the yearly limitations are on retirement savings.
Savings Amounts and Keeping an Eye on Things
How much should you be saving? When you are in your twenties, saving at least ten percent of your income is advisable. You are a long way from retirement and over time your money will continue to accumulate and grow.
Sometime in your thirties, think about upping your retirement savings to fifteen percent or more. The years are moving by quickly and you want to make sure that you are going to have enough saved to be comfortable in your retirement. If you are in your forties, continue to up the contribution to twenty percent.
No matter what your age, always keep an eye on your retirement account. While there may be ups and downs, it is important to know just how much money you have. From there, determine how much you will need to feel secure in your retirement. If there is a gap between the two, make retirement savings more of a priority. The earlier you begin to save, the better.
As you keep an eye on your retirement accounts, you can make adjustments as needed to ensure a solid financial retirement.
