During the process of outlining career or financial-related goals, planning for retirement should be a crucial focus. After years of working hard in a fulfilling career, you’ll be ready to move on to the next exciting phase of your life, where you can pursue new avenues of life or settle down and relax. However, in order to do that successfully, it’s important to set aside money at a young age for when you finally retire; enough to live the rest of your life comfortably without having to work. Despite this, only 16% of Americans have more than $200k saved for retirement. The reasoning behind this statistic is the fact that retirement savings can be a confusing and difficult process to navigate.
But don’t worry, there’s hope:
As we enter the information age, technology is becoming incorporated into our lives more and more each day. From smartphones to smart homes, there’s no getting away from the development of new technology. While it may be easy to get overwhelmed from the latest digital trends, financial tech is an expanding e-market. New apps are allowing people to streamline their savings process, and therefore, make saving for retirement simple and convenient!
Digital Budgeting Apps
Budgeting is crucial to any savings plan, particularly for retirement, because in order to save money, you need to have a budget. On top of that, knowing how much your expenses cost you each year can give you insight into how much money you will need to set aside for retirement. That way, you can easily cover those yearly expenses when you are no longer working.
Knowing where your money is going is always a good thing, even though it can be overwhelming at first. Once you start budgeting, you will begin to get a better understanding of how your finances are being allocated. As you do this, you may find you are overspending in some areas of your life where you can afford to cut back. Using an app to monitor your finances can give you a space to organize your budget directly from your smartphone. Many of these apps connect directly to your bank account as well, so you don’t need to manually calculate every purchase you make — they just update automatically! By making the budgeting processes that much easier, it can take a huge weight off of your shoulders and allow you to focus on the bigger picture when it comes to building your retirement savings.
Banks with Unique Savings Features
Working alongside mobile budgeting tools to help you save more money, there are now new online banks that offer savings features that allow a hands-off approach to the process of saving money for retirement. With automatic saving features, you can get money sent directly into your savings account without having to do it manually.
Online bank accounts have the added benefit of giving you direct control of your finances at any time you need, because you can access them from your mobile device. However, it’s important to keep in mind that putting money away into savings is only one part of the retirement savings process. Establishing an IRA or 401(k) are two other important elements of the process that could be beneficial to evaluate.
IRA and 401k Apps
The longer you invest money in a retirement plan, such as an IRA or 401(k), the more money you’re going to be able to withdraw when you’re no longer working. This is due to compound interest, which has a much greater effect on your investment the longer you put money into it.
Talk with your employers about the 401k options they offer and what they allow when it comes to the time where you can start adding money to the account. Many companies often offer employer 401k matching as well, which means that they will put a certain percentage of money towards your 401k plan to help you boost your retirement savings even more. (If your employer offers 401k matching, always take it. It’s free money!). Most financial gurus recommend that you put away at least 15% of your income into a 401k.
If your company does not offer a 401k plan, you can always establish an IRA, such as the Self-Directed IRA. A Self-Directed IRA is a Traditional IRA that allows you to invest beyond traditional investments and into alternative assets, such as real estate.
If you are self-employed or a small business owner with no employees, the best retirement plan to establish is a Solo 401(k), as it offers higher contributions and a Solo 401k loan option. The Solo 401(k) is like a traditional qualified 401(k) plan, except it is uniquely designed for small business owners and individuals who generate some form of self-employment income.
Having full control of your retirement plan is a great way to decrease financial stress, you always know where your money is and how much you have put away for retirement. Not to mention it allows you to change which stocks, bonds, and other investments your money is going to, allowing you to potentially increase your ROI in the long run. By establishing a Self-Directed plan, you can allocate investments in alternative assets such as cryptocurrencies, precious metals, and more, allowing you to create a diverse retirement portfolio.