How to Save Money for Retirement

Something that we as a nation has lost track of. Our nation has become obsessed with instant gratification. How much do you need in your nest egg in order to retire comfortably? For everyone it is not equal. Some people enjoy the simple life, and others like to spend lavishly. Whatever you want to do later on, one thing is true: Money gives you financial freedom in order to do whatever you like. Here are some tips on how to save the money you need in order to make the most out of your golden years.

Save 10% of your income

Whatever you make, whatever your income bracket, it's not too little to say that you can't save 10% of it. This way, you will not feel the urge to touch it, and after your working years have passed, you can look back and see how much it has grown. Buy bonds with it or put it in a Money Market fund. Even if you don't invest it, the money saved isn't going anywhere, although investing it is probably the best idea in today's society. Also, if you feel that you can muster up the urge to live like a broke college student for a couple of more years, you can save 20%, even 25% of your income. Challenge yourself, but don't suffocate yourself.

Try not to use Credit Cards

We as humans like to take the easy way out. This applies to credit cards. The idea that you are just swiping a plastic card for a couple hundred of dollars doesn't seem that bad, but when the end of the month rolls around, you have a huge bill sitting in your mailbox and all you can do is pay the minimum payment. Things like this snowball EXTREMELY fast. With credit card companies charging up to 20% interest on their money that you spend, it is never a good idea to use plastic unless you are buying something large like a refrigerator, or if you absolutely must. Pay everything with either cash or your checking account. This makes sure that you are in the clear, and you don't have debts you "may or may not" be able to pay later on.

401(k), 401(yay)

Remember to contribute to your 401(k). Some companies match your deposits in your 401(k), which is basically free money. If everytime you earned $10 someone gave you another $10, how is that an offer you can refuse? Although you will not be able to touch that money (you can, but remember the penalty is HEFTY), if your employer matches amounts you put in, you are well on your way to retiring comfortably!

Put your raise to good use, not buy a new car

Besides, what's wrong with your current car? Too often families try to upgrade their lifestyles all to quickly. A layoff or recession happens, and they somehow find their lives turned upside down as they sign a foreclosure and drown in debt. Don't push your wallet to hard, because it will burst. If you get a raise at work, put that extra income toward a fund of some kind, whether it be college for the kids or your own retirement. You've been living really well up until this point without that extra income, so why do you need it now?

IRA

Put your money into an IRA (Individual Retirement Account). This money like a 401(k), incurs penalties for withdrawing early, so do not touch it. Instead remind yourself that this money saved is money that will grow expontentially, money that could be put to good use as a necessity later. Another two words: Tax advantages. Money contributed to retirement is qualified for tax advantages by the government. Now where are you going to see that?

Start Early

It's no secret why compounding interest is called the "Eighth wonder of the world." The money grows on itself at an alarming rate. It's a bit like a turbo charged automobile. It is slow to startup in the beginning, but near the end the progress is amazing. Compound Interest takes your principle and earns you a percentage interest based on that principle. If you successively use the previous period's principle added to the interest you earned in your previous period, that is considered your new principle. It grows based on time. That is why starting early is so important. Make time work for you, not against you.

One thing to remember: The average American spends about 18 years in retirement. If you want your retirement to be filled with joy; If you want your retirement to be filled with smiles with your family, never having to worry about money, then learn to put some of your money away and make it work for you. Nowadays, many people are working until they are 70+ years old. That's a horrible way to live, but hey, that's the choice they made in their youth. Be smart about how you use your income.