There are a few financial moves you can make to ensure your retirement is more easily funded. For example, earning a passive income. One instance of this is property-renting, which assures a monthly payment from a source that doesn’t require much effort. Start building your second source of income early on to straighten out bumps in the road and build experience.
You can also build passive income through investments, which many people use to grow their funds. Dividend stocks are an investment product you may find appealing, as they increase their dividend each year and will eventually give you a significant payout annually.
You can also guarantee income by picking safe investments such as certificate of deposits or through the purchase of an annuity, but be aware that if you’ve invested in stocks, this will lower your dividend payout amount. Some savvy investors strategize their retirement entirely by buying a portfolio of investment assets, but typically, this alone will not be able to wholly support someone throughout their retirement.
Another step you’ll want to take prior to entering retirement, is paying off your debts in order to retire without the frustrations and financial drains of money owed. If you find that you have more financial needs than you budgeted for, want extra cash, or simply want a productive way of filling up your time, consider seeking part-time work in your retirement.
In terms of savings, contribute to your retirement savings pot by matching the maximum limit you can contribute to your plan each year, in order to you make the most of the tax-advantaged unique features of your account. The best vehicles for your retirement savings will most likely be a 401(k) plan and a traditional IRA or Roth IRA.
In a 401(k) plan, your employer matches your 401(k) contributions dollar-for-dollar, up to 6 percent of your salary, so funding that account first should be your priority. Aside from that, making deductible contributions to some sort of IRA is also a wise move, and if you choose to contribute to a Roth IRA, your contributions are made from after-tax dollars, and withdrawals are income tax-free.