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3 Ways to Save for Retirement on a Limited Income

 

No matter what age you’re at, saving money for retirement is always an important aspect to consider about your finances.

According to a 2012 survey by the Employment Benefit Research Institute, only 14 percent of Americans are confident that they’ll have enough money to support themselves in their retirement. If you’re one of the other 86 percent, check out these ideas on how to save enough for your retirement.

1. Invest Your Money

invest

Image via Flickr by stockmonkeys.com

One of the most popular ways to save for your retirement is to invest your money. Contrary to popular belief, you don’t need a large chunk of cash to start out, and you can always add more money to your investments to increase your profits.

Investing is an especially useful technique if you’re young since it takes time to accrue interest, but anyone can invest. There’s no saying how much money you can save for your retirement by investing; it all depends on how much you invest, how long you invest, and what market you’re investing in. Some examples of areas you can invest in include:

  • Stocks
  • CDs
  • Real estate
  • Mutual funds
  • Savings accounts
  • Bonds

If you’re just a beginner investor, make sure to work with a company that knows what they’re doing and has plenty of experience, such as the Fisher Investments CEO.

2. Consider Your Corporate Incentives

Countless companies offer corporate incentive programs, and part of this often includes retirement plans. If you work with a company that features these incentives, you should consider signing up for one of their programs. Depending on the company you work for, you might be able to choose between different plans. Some examples include:

  • Defined Benefit Plan-Employers fund a defined benefit plan, and the program pays you a specific amount each month once you retire.
  • Defined Contribution Plan-A defined contribution plan combines contributions from your employer and your own paycheck. Oftentimes, you get to decide how to invest these contributions, and then when you retire, you receive the account balance. A common type of contribution plan is a 401(K).

3. Open an Individual Retirement Account

Blue Piggy Bank WIth Coins

Image via Flickr by kenteegardin

An individual retirement account is another option that can help you save for your retirement. These are private accounts that you can contribute on your own. Benefits of an IRA include:

  • It is tax-deductible; you only pay taxes on it once you withdraw from the account.
  • You can earn profit through interest rates.
  • You can contribute what you want and what you can afford.
  • You have control over your investment in the account.

Additional Tips

While these are excellent options for investing, there are several other aspects of retirement savings that you need to consider. For one, it’s important to start saving young. The younger you start saving, the more money you’ll have for retirement. Next, don’t touch your retirement account until you actually retire. Not only will you reduce your savings, but withdrawing early usually comes with a penalty fee. Finally, it’s important to create goals specific to your situation.

For more ideas on how to save on a limited income, check out the article How These Five Women Are Saving for Retirement.

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One Response to 3 Ways to Save for Retirement on a Limited Income

  1. Charlotte June 1, 2013 at 9:55 am #

    Great money saving tips!
    Charlotte recently posted…Lowes Foods Ad + Coupons 5/29-6/4My Profile

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