7 Golden Tips To Help You Save For Retirement On A Small Income 20 Comments
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Before you opt for retirement, you need to come up with a comfortable retirement plan that will sustain your life span. In this content we’ll discuss steps and tips that will help you create a bright future for your life.
Below are some of the major 7 tips that will articulate your retirement plan with small salary:
Your low income should not be an obstacle for building your future retirement: It’s a challenging task to save for your retirements especially when your paychecks are minimal to cover your expenses. But there are many ways of breaking through with the small income.
Let’s discuss some of the major 7 tips that you should use:
1. Get a job with super retirement benefits: Before you decide which job to take, you should analyze their retirements package and how they compensate their employees. According to Sam McPherson a certified Financial Planner of McPherson Financial Advisors in Brooklyn, N.Y. says that a job that offers a retirement plan should be looked harder than the one that does not have a retirement plan.
2. If you’re smart enough, you should take advantage of tax break income. If you want to defer payment in income tax, then you should be saving small amount in traditional 401(k) or IRA. An employee within the 15% tax bracket who saves $2,000 in an IRA or 401(k) will save $250 on their next federal income tax bill.
3. Take advantage of saver’s credit fund. Low income earners who contribute to 401(k) or IRA normally get retirement savers tax credit. Eligibility of tax credit depends with the size of your income and how much you contribute. For example if you earn $40,000 and contributes $1000 to IRA Gold, you will get a $100 credit.
4. Spread your risk. As the saying, “Don’t put all of your eggs in one basket,” As a financial advisor, I’d recommend you diversify your portfolio so as to avoid financial problems. The most common diversification that I’d recommend is to divide your portfolio among stocks, forex or binary options. Don’t just stop with bonds and Stocks, look for other strategies to spread your risk among your investment.
5. Make contribution to Roth IRA. Low income earners who are the below tax bracket but expect to earn more in future have much benefits to gain by making contributions to Roth IRA. Based on your current low income, you’ll be able to pre-pay for your income tax via Roth IRA. If you’re a young person I’d suggest that you use Roth account as it will give you time for growth. The benefit of Roth account is that it can help you withdraw your contributions without paying income tax or any penalty for an emergency but you’ll not be able to withdraw your earnings.
6. Keep expenses low. If you need to make very dollar count, then you should keep your costs low. Unnecessary fees can really damage your retirement plan. If you have an investment account, make sure to control the cost that comes with. To be on the safe side with cost expenses, I’d recommend that you choose low-cost index funds.
7. Set up a direct deposit from your checking account. This strategy will help you not to spend like a celebrity. If you’re on payroll, then you should select payroll withholding plan. This plan will help you automate your retirement savings by withholding your paycheck. Once you set it up, you’ll realize how profitable it is.
Over to you
Have you noticed any other interesting tips that might help us save for our retirement? Kindly share your thoughts on the comments below.
Thanks a lot and have a Happy Retirement Day!
Author Bio: Bill Achola aka (BillyBoy) is on a mission to help good people to make a lot of money on the internet they deserve. If you’re one of them, check out his popular blogpost about earning money online (surprise!) On the next issue Bill will talk about 19 Major Warning Signs You’re Becoming Poor, stay tuned.