Life after 60 can be quite challenging if you don’t have a solid nest-egg. The Social Security benefits can give you some sort of financial support. But is that enough to cover your living expenses? Can you cover your living expenses as well as medical expenses with that money?
First and foremost, you won’t get Social Security benefits before you turn 62. Can’t you claim Social Security benefits before 62? Yes. You can. But in that case, you will get less money.
Secondly, if you retire at the age of 65, you can expect to receive around $2,814 as Social Security benefits. Take a calculator and crunch numbers. Can you survive with this amount? Moreover, what about the emergency expenses? Plus, you shouldn’t forget that your living expenses are likely to increase by the time you retire due to lifestyle inflation.
A solid nest-egg ensures a comfortable retirement life. It helps you to spend your retirement life on your terms. You will be your boss. Plus, you can plan for the things that you couldn’t do before due to job constraints.
If you haven’t paid any attention to your retirement plan before and you wish to build your nest-egg, then you have come to the right place.
Today, I will share a few tips that I have used to jump-start my retirement plan in just 30 minutes. Yes, you read it right.
Five years back, I didn’t have any retirement plans. So, one day I was having a discussion with dad regarding my future plans, and the topic of retirement popped up. I told dad that there was no retirement plan. His look was priceless as it seemed that I had arrived from Mars.
Dad worked in a small organization for around 34 years. He didn’t make a lot of money as the company couldn’t afford to pay him a fat paycheck. But with clever planning and discipline, he could build a solid nest-egg. He studies a lot about investments and retirement plans even now.
After hearing that I didn’t have any savings, it was he who gave me the below-given tips to kick-start my retirement plan in just 30 minutes. So, here we go:
1. Set up your 401k account (or other retirement account) over the phone
Call your employer and ask him if there is a 401k plan or other retirement plan in your company. I didn’t call my boss. I called up the HR manager at my company and asked about the 401k plan. She told me that our company had a 401k plan. She was quite astonished to know that I had not opted for it before. She told me that my boss matched the employee contribution, and I should take advantage of that. She also informed me that I enjoyed the tax benefits by contributing to the 401k account. But she warned me against withdrawing money from the account before I turn 59 and a half years to avoid the tax penalty.
The phone was on the speaker, and dad was listening to the entire conversation. He just gave me a winning smile, and I smirked.
Anyway, the HR manager asked me to send an email to her with all the essential documents for opening the 401(k) account. I had all the documents on my iPhone. So, I sent her an email within a few minutes. She sent me a few forms online, which I had to fill out. I had to mention the amount I wanted to contribute and also appoint a beneficiary. I did all that. The paperwork was done within 30 minutes, but I had to wait for a few days to start the plan and make contributions.
You should always try to save almost 15% of your paycheck. Start with a 3% contribution and increase it by 1% every year. Make it your goal to reach the maximum contribution limit within a few years.
2. Call your bank to open an online savings account
Call your bank relationship manager and ask him if he wants to open an online savings account. Ask him how to proceed and if you can do it through the mobile banking apps. This is what dad told me, and I called my bank relationship manager. As I was already an existing customer of the bank, it didn’t take a long time to open an online savings account. I spoke to him for a few minutes, gave him the necessary details, and he completed the necessary formalities online.
Now, why am I asking you to open an online savings account? It’s because online savings accounts give you a high annual percentage yield. So, compounding interest can help you save money fast.
I have set up an automatic debit system. You can do it when you open a savings account. Each month, 15% of my take-home pay goes directly to that account. If everything goes well, then I would be able to save a significant amount by the time I retire.
3. Attend a free counseling session to shed credit card debt
Dad asked me if I had debt. I had credit card debt. He suggested creating a balance between paying off debt and retirement savings. I called a toll-free number of top debt relief companies and attended an online free counseling session on ways to shed credit card debt. They agreed to help me tackle my debts with an affordable monthly payment plan. Once it was done, I was relieved. Lower monthly payments meant that I could put away more money toward retirement.
A small suggestion: I had to share a few documents online for initiating the debt repayment process. But, I didn’t share any confidential information that could lead me to trouble later. Here are another 4 reasons for not sharing finances online.
The aforementioned tips helped me to jump-start my retirement plan in just 30 minutes. However, there are a few other tips that can help you start your retirement plan.
For instance, you can invest in a Real Estate Investment Trust (REIT) through the share market. The REIT owns various types of real estate and offers a fairly high return. Otherwise, you could look at dividend aristocrats, or kings, which have increasing dividend payments annually for at least 25 years or more. If you are investing in the share market, it is important that you assess your risk profile. Last thing that you want is to invest in a company that than looses 20% within the following week.
Guest Post: This guest post has been contributed by Linda Richardson (@LindaRossie9), who is a New Jersey-based financial writer for creditcardconsolidationdebt.com/. Linda uses her curiosity, connected with her knowledge as a financial expert, to write about a valuable lesson for small businesses. You can reach out to Linda at [email protected].
2 thoughts on “How I Jump-Started my Retirement Plan in Just 30 Minutes”
Social Security benefits vary wildly depending on how much you paid in FICA taxes throughout your working life. While the average benefit you used would be challenging to live on my wife and I will draw over $65,000 a year in Social Security payments in five years when we start claiming it. Even though we don’t need that to live on it is still a substantial “pension” and will be inflation adjusted going forward. But I wouldn’t want to rely on that as being rock solid because those benefits may be reduced going forward.
Thank you so much for your feedback. I share the same sentiment with you. Anything can happen in the future. So, we should always explore other options to secure our retirement.