Smart Strategies to Prepare for Retirement Savings
Discover practical strategies to boost your retirement savings, including opening personal retirement accounts, incorporating savings into your budget, diversifying investments, and collaborating with your spouse. Flexibility and disciplined planning are key to securing your financial future, especially if your income varies or you're self-employed. Start today with these expert tips to build a stable retirement fund tailored to your unique circumstances.
More individuals are choosing freelance work over traditional employment. Although income streams may be inconsistent, it's crucial to save for the future. If you’re self-employed and wondering how to set aside money for retirement, here are some effective options.
Open a Personal Retirement Account (PRA)
While many companies offer 401(k) plans, self-employed individuals can utilize Personal Retirement Accounts to build savings. Contributions are made from your taxable income, helping you accumulate funds over time.
If you're not employed, you can still contribute to a PRA using your taxable earnings, growing your retirement nest egg based on your contributions.
Bonus Tip - Investing in a Roth IRA allows tax-free withdrawals, providing additional flexibility for future income.
Include retirement savings as a fixed expense
It’s easy to overlook saving for the future amid daily expenses. Treat retirement contributions as a set monthly expense, ideally allocating around 10% of your income to a retirement fund or savings account.
Ensure your funds are in accounts that are accessible only for retirement purposes, preventing impulsive withdrawals. Retirement savings should remain untouched unless for approved reasons.
Diversify your investments
Relying on a single investment type can be risky. Rather, diversify across stocks, bonds, mutual funds, and other assets to optimize returns and protect your principal.
Create a joint savings plan with your partner
If you’re unemployed or self-employed, government schemes may seem complex. A practical alternative is having your spouse contribute to your retirement account if they have a stable income, helping you build a more resilient financial future together.
Adjust your contribution schedule based on your income
Retirement accounts typically require yearly contributions by April 15. If your income is irregular, plan to deposit funds whenever possible, making contributions when your finances allow, rather than forcing a fixed schedule.
