Finances are tough. And retirement planning is a part of finances that feels elusive and impossible for many of us, although every day it gets more important. Saving for retirement is essential, because you can only withdraw so much from Social Security each month.
So retirement planning is important, but how do you do it? Well, some of us manage to understand a lot about the complicated world of retirement planning, and then benefit hugely from it. Marie Coleman-Johns is one of those people, and she decided to share her tips so we could all benefit.
Marie is a finance guru.
She even runs her own business, alongside her sister, that is devoted to helping other people be financially literate. Wineance is an online platform that teaches people the tools they need to be financially independent.
Marie understands firsthand how hard it can be to understand the world of financial planning, because she was once in a similar position. She grew up financially insecure and took it upon herself to learn as much as she could to improve her finances.
After saving a huge amount, she decided it was time to share her 401K tips.
In three years, Marie grew her 401K by $100,000. This is impressive alone, but even more so when you consider that the median balance in American’s 401K plans is $25,775.
A 401K is the retirement fund that most Americans put their money into. It helps you save for your retirement, so it’s pretty important to understand it.
She says it helps to have a goal in mind.
Every time Marie puts money into her 401K, her employer matches this contribution. That is the case for many companies, so you may want to see if your job does this!
Using this system, Marie decided to consistently contribute money to her account, and never take any amount out for any reason. She always put the same amount in at every contribution, and this consistency, along with her employer’s contribution, helped her grow her 401K quickly.
She makes smart choices about what funds she invests in.
For Marie, getting to her current position required a lot of research. Because there are a variety of funds that you can decide to put your 401K in, you need to find the one that works best for you. Different funds have different rewards and risks associated with them, and they might be appropriate for different people. Marie explains her decision to invest in a large-cap index fund by writing:
“Everyone has a different risk tolerance. Being 95% invested in stocks works for me for a few reasons. I am 38 years old and I have time to ride out any dips in the market. I lived through 2001, 2008, and 2020. I have come to expect significant market downturns to come along at least once per decade.”
If you are a bit older, or in a position in your life that doesn’t allow you the freedom to ride out stock market dips and twists, it may be in your interests to invest in a more conservative fund.
She puts in as many contributions as she can.
This is definitely an argument for living below your means. Marie says that when she started making a higher salary, she did not change her lifestyle, but instead decided to put as much of her surplus salary in her 401K. She put so much money into her 401K, it maxed out the IRS’ annual limit!
While Marie acknowledges that this would not have been possible without the increase in her salary, it still reinforces that if you can comfortably live below your means, you should. That money can go towards ensuring your future.
“The best time to start investing is yesterday; the next best time is today.”
Many people don’t start saving for retirement until their 40s or 50s–and some people don’t save for retirement at all. While this is often not anyone’s fault, people get caught up paying off student debt or mortgages, it’s never too late to finally start saving!
For more tips, read this article.
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