The choices you make now could have a significant impact later when you retire. Buying things is fun. But splurging on too many things now could limit your ability to splurge later — or even to afford the necessities. If you shortchange your savings, you might end up having to live on a lot less or postpone your retirement.
You don’t have to eliminate all discretionary spending but think twice before buying things you don’t need. Before making a big financial commitment, weigh the pros and cons. For example, if you normally buy a new car once your current car loan is paid off, try waiting a few years to replace your car. Then tuck the money that would have gone to car payments into your retirement account.
Making healthy lifestyle choices — eating well, exercising, taking care of yourself — can pay off throughout your life. The potential benefits are not just physical. Your choices may promote good financial health, too, by keeping your medical costs in check now and during retirement.
The amount of savings you have in your retirement plan when you retire will depend in large part on your decisions about how much to contribute. Many experts today recommend annual pre-tax contributions of between 10 percent and 15 percent.
How much you’re able to earn will influence how much you’re able to save. Ideally, the more you earn, the more you can save. Therefore, an opportunity to advance your career is also an opportunity to advance your chances of a financially secure retirement.
If you change employers at some point, you may be eligible to withdraw money from your plan account. As tempting as it may be to cash out, that would derail the progress you’re making toward your goals. Instead, consider choosing an option that lets you keep your savings growing tax deferred.
Article is adapted from content provided by DTS.
