You’re nearly a year into your first job as a demurrage insurance analyst for a significant transportation and logistics company. Your father was a deckhand at one of the commercial shipping companies in the state. He passed away just a few months after assuming your job. All his income was spent providing for you and your brothers. He didn’t manage to save anything for himself until the very end. He’s part of the reason you’re working in the industry you are now.
You admired his dedication to his work and his commitment to his family. And he was undoubtedly proud of his accomplishment through you and your brothers. But you want to do a bit better than how your father did, particularly on the financial aspect. This early, you are researching the best way to invest for your retirement.
How Americans Are Saving for Retirement
With the way you are thinking, you are certainly not part of the 21% of Americans who aren’t setting aside anything from their income, neither for retirement nor emergencies. While 28% can save between 6% to 10% of their income, It’s still a struggle for many as about 20% are only able to save 5% or less of their income for a rainy day.
Financial experts suggest that if you are in your 30s, you should be putting away more than 16% of your annual income to live comfortably by the time you retire in your 60s.
According to Bankrate.com, the primary reason why American’s aren’t able to save is expenses. This is about 38% of Americans. Those who haven’t put much thought about it or consider their job as inadequate to make savings, combine for 32%. Here are a few more ideas you should consider in pursuing your plans to save early for retirement.
- 401(k). If your company offers a program towards 401(k) plus a matching contribution, take advantage of both. The $1,000 you put in becomes $2,000 worth in the pool because your company matches your contribution.
- Cut on cost. Remember that “expenses” was given as a reason for not saving. So the logical step to take is to cut down on expenses. If you do well in your job and get promoted, you’ll have the salary raises too. Set that aside instead of upping your lifestyle by buying a new car or traveling abroad. Another prominent option is, of course, to create and stick to a budget.
- Real estate. Now that the housing market has significantly rebounded, investment experts are keen on including real estate in your portfolio. This might be the middle of the road thing for you, especially if your leaning towards buying a property. Another option many suggests is to invest in REIT or Real Estate Investment Trusts. Your money, together with those of others, are pooled together to buy a property.
- Insurance and investment products. Big insurance companies have various products that not only focuses on life insurance but also on investment products with living benefits, including retirement, burial insurance, Having a burial insurance policy can allow you to plan ahead for the average funeral cost associated with your final expenses. Make sure that you have a thorough discussion with an agent about the nature and advantages of the product you are considering.
These are a few options for you to consider. Aggressively betting on the stock market is also an option, but it can present some risks. Make sure that you get the proper financial advice from a person you can trust.