The best way to save for retirement is also fairly obvious; save while you’re young. Most young people justify their small investments by claiming that they have many years left until retirement. This route can be risky, however, since you can end up playing catch-up as you get closer to retirement. Don’t learn this the hard way, however- start as early as possible.
Apart from adding contributions from your paycheck, there are several other ways to add your retirement savings.
Permanent Life Insurance
Permanent life insurance can have a wide range of benefits beyond the death benefit; tax-free proceeds and a possibility of cash accumulation over your lifetime. Some instances of permanent life insurance include whole life insurance and indexed universal life insurance.
Take advantage of catch-up contributions
If you are 50 or older and you missed out on saving a lot early on, you can go beyond the normal limits on your IRAs and 401(k)s with the special catch-up contribution allowances. Check your specific policy or talk to your HR department about your options.
Automated Savings Contributions
It helps to automate your savings as it ensures that your retirement savings are not directed to other uses. Retirement plans such as the 401(k) plan require consistent contributions, and the best way to accumulate more assets is by having your savings on autopilot. You can decide to save up to 20% of your salary, which is an easy ‘set it and forget it’ that will be a great advantage when you retire.
Small Hedge Funds
Since 2008, most investors have stayed away from hedge funds in favor of index funds. However, this is an asset class that can still earn you some decent returns considering its consistent track record. Hedge funds are also less volatile, making them suitable for the current market conditions that can sometimes be very unpredictable.
Health Savings Account
Most people have health accounts but do not maximize them. In fact, some people do not make any contribution to their health account at all. The plan provides you with tax-free money for deductibles, copays, and Medicare premiums for those aging into Medicare. Importantly, you do not need to worry about your retirement healthcare expenses when you have a health savings account.
Purchase an Online Business
Stay abreast of the wave of the future and invest in an online business. There are nearly limitless options to choose from, and with startups like Uber and Dollar Shave Club going from nothing to dominating their fields, the initial outlay is low for a potentially amazing return.
Saving for retirement can be a challenge, and you shouldn’t do it alone. Make sure that you have a financial professional help you through your finances and make sure your retirement is safe.