Retirement planning is one of the few things in life that offers no room for procrastination. Any financial advisor will tell you that the best time to start saving for retirement is as early as possible. Despite this advice, 33 percent of all Americans have less than $5,000 saved for retirement. Even worse, polls show that Americans are better prepared than a majority of their global counterparts. If you want to ensure your retirement funds are securely in place, consider following the strategies below:
1. Free Up Your Home Equity
If you have recently retired, or will soon be exiting the workforce and you will require additional income, you may want to consider an equity release. An equity release is a lump-sum cash payment in exchange for a percentage of the future sale price of your home. It is available to older individuals regardless of the total outstanding mortgage. This type of loan allows you to remain living in your home and retain your name on the title while providing funds you may need in retirement.
2. Move Somewhere Less Expensive
If your current cost of living seems exorbitant, you may want to join the exodus of people to countries where their retirement dollars stretch farther. The Internet makes it simple to locate possible retirement options. Research them and read reviews of those who have gone before you. If you don’t plan to retire now, but want to be kept abreast of possible new retirement locales, consider setting a Google alert for specific keywords and regions.
3. Find an Employer that Matches Funds
If your retirement is further away, take advantage of the time to find an employer that will match pre-tax contributions to 401(k) retirement accounts. Ideally, you want to set aside 15 percent of your salary every year for 40 years in your 401(k), including the employer’s matching dollars. You can then invest that capital in stocks, bonds, mutual funds and other money making instruments. When you capitalize on matching funds and make wise investment decisions, you can grow your retirement dollars quickly.
4. Take Advantage of an HSA
HSA stands for Health Savings Account; a pre-tax fund that is set aside for healthcare expenses. HSA’s have recently weathered harsh criticism in the media and elsewhere, where some have branded them retirement loopholes since residual funds not spent on healthcare, can be invested in other areas. The older you become, the higher the percentage of your paycheck you are allowed to divert to an HSA. Once you reach 65, you can begin withdrawing funds for expenses other than healthcare with no penalty.
5. Hire a Financial Advisor
If all of the above seems overwhelming, you may want to consider hiring a personal financial advisor to help you create a path to your retirement goals. There are different types of advisors, some are commission based, while others charge a fee. Some are not people at all! Robo advisors automate managing your investments and do not charge any additional fees. Many financial advisors are surprisingly affordable. When you consider the potential returns of sound financial management, they can be a wonderful investment.
If your retirement is near and funds are short, look into equity releases or consider moving somewhere less expensive. If you have a longer time horizon, find an employer that matches retirement contributions and offers HSA’s. Finally, if you need someone to help direct your efforts, consider hiring a financial advisor.