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Preparing for Retirement

Preparing for retirement should start the day you have joined work. It essentially entails savings and the different aspects of savings. Although it is an obvious fact, yet the facts from the United States Department of Labor show that lesser than half of Americans calculate how much money they should save for retirement. To be on the side of financial security, you must plan accordingly for your retirement savings plan. Presented here are some of the aspects that you should keep in mind while planning for retirement.

  • Inculcate a habit of saving money every month: Set aside some money for saving every month. Cut the corners of your expenditure and save as much as you can afford to. You should remember that every little contribution to your savings account will contribute to your own financial security in the future.
  • Chalk out your retirement need according to your status: You live by a particular standard of living. In order to maintain the same standard of living after you retire you should calculate the minimum amount that you need to maintain your status. This is your base money. Grow your savings on this base money. You have many years in hand. The earlier you start planning, the better off you are after your retirement.
  • Contribute to the retirement saving plan: If your employer offers a retirement saving plan like the 401(k), contribute as much as you can to keep the plan going. In time, tax deferrals and compound interest on your savings plan would only increase your wealth. Be aware of the various aspects of your plan. For example, you should know the minimum amount that you should contribute to get full contribution of the employer. Also, you should know the duration that you have to stay with the plan to get the benefits of your savings.
  • Don’t withdraw from your retirement savings: Withdrawing amount from your retirement investments hould be the last option that you should consider, even in case of dire financial emergencies. In case you withdraw from your retirement plan, you will lose both the principle and the interest & you have to pay the withdrawal benefits. If you are switching jobs, then you have two options. You can either leave your savings in the current plan for retirement, or you can include them in an IRA or in the plan provided by your new employer.
  • Put money in the IRA: The IRA is an important plan related to preparing for retirement. The Individual Retirement Account is used by most to plan for retirement. There are two types of IRA, the traditional IRA and the Roth IRA. The type of tax advantage that you are entitled to receive depends on the type of IRA you are subscribing. Do proper research to understand which category is best suitable for your scenario.

Be in the loop about your social security benefits: Learn more about your social security benefits and how they can be useful after retirement.

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