The vast majority of employees don’t yet have enough money to retire, according to a survey from the Employee Benefit Research Institute. The survey found that almost half the workers said they would need SR2,000,000 in order to retire. However, 28% of them have less than SR4,000 saved up. Over half of them (57%) have less than 57% saved up.
Sixty four percent of the workers said that they were behind their retirement schedule. Additionally, less than half of them (48%) say that they or their spouse have ever bothered calculating how much they will need to save.
It’s difficult to think of something that might be so far ahead in the future. However, investing in your retirement fund is one of the most important decisions you can ever make. If you’re still struggling to save up, try these handy tips:
- Open a retirement fund. This is the first and easiest step, yet so many Americans overlook this important stage. Part of the reason is that many young people think they don’t make enough money to start investing into a retirement plan. It’s easy to dismiss long-term investments when you’re only focusing on short-term success. You can always open up a Retirement fund with any of the local banks like SABB or NCB.
- Start as soon as possible. Time in the market is better than timing the market. Starting as early as your twenties can give you a major advantage and ensure that you’re set by the time you’re ready to retire. For example, a 25-year-old who stores SR300 a month (only SR3,600 a year) can expect to have over SR900,000 when he retires, assuming an 8% annual return. The longer you wait, the more you’ll miss out in the long run.
- Make it automatic. Automate your investing so you won’t ever miss out on payments. Many plans will automatically deduct a certain amount of money from your account on a consistent basis. Furthermore, some investment advisors can buy and sell stocks automatically so you don’t even have to think about it.
- Cut spending. Make a budget and track your spending. See where your money is going each month. Are there areas where you can cut back a little bit? Perhaps spend a bit less on food and drinks to add a bit more to your retirement fund. Every halala counts. Remember that a Riyal put into your retirement fund now could multiply after several years.
- Create a goal for yourself. Do you know how much you’ll need when you retire? The answer will depend on many factors such as where you live and how old you are. Contact a financial planner to help you set a financial goal for yourself. It doesn’t need to be exact, but it helps to have a target in mind. Do the same with your budget.
- Pay off your debt. The longer your debt lingers, the more it will hamper your savings. Tackling debt should be a priority. Set a goal for yourself and determine how much money you’ll contribute to paying off your debt each month. Use this technique to ensure that you’ll be debt-free within a considerable amount of time – preferably two years or less.
- Maintain your cost of living. It can be tempting to spend more money once you get a raise or bonus. However, you should still stick to spending the same amount of money you made before so you don’t end up over-spending. Use the extra income to add to your retirement fund or pay off debt. You’ll have plenty of time to treat yourself once you know you’ve got a secure retirement.
- Go the extra mile. Know how much you’ll need and then add more to it. Once you’re retired, your retirement fund will be your main source of income so you’d better make sure you’ve got enough. You certainly don’t want to outlive your retirement plan so adding any bit of extra contributions will help.
Saving up for retirement is something that many people overlook. However, nobody wants to run out of money because they didn’t save up when they were younger. Use these tips to get started and stay on track. You’ll thank yourself for it when you’re older.