1 Ridiculously Simple Retirement Savings Hack You’ll Wish You’d Known Sooner | #hacking | #cybersecurity | #infosec | #comptia | #pentest | #hacker

The first step in having a financially secure retirement is knowing how much you might need to live comfortably after you get out of the rat race. Having a number to strive for will inform your savings and investing strategy through the years — all while you’re paying for all the other stuff we all have to pay for in life.

There are a few different rules you can use to estimate how much you’ll need, but one I like comes from Fidelity Investments. It recommends having saved twice your salary at age 30, three times by 40, six times by 50, eight times by 60, and 10 times by 67, when most people reach their full retirement age. This gives you guideposts along the way to see how you are doing.

So, if you are 40 and make $50,000 per year, you should have about $150,000 in your 401(k) and/or various retirement investments. If you are 62 and want to retire, and you make $75,000, you will need nine to 10 times that number, or roughly $675,000 to $700,000.

This is, of course, a guide. What you’ll actually need will depend on how much your spouse has, your lifestyle in retirement, your housing situation, and where you live, among other factors. But with that in mind, you can assess where you are and develop a strategy to get there. The strategy doesn’t have to be complicated — in fact, there is one ridiculously simple hack that can play a major role.

Do this one thing

First and foremost, you should absolutely make sure you are getting the full company match, if there is one, in your 401(k) or employer-sponsored retirement plan. That is free money left on the table if you are not. The power of getting the entire company match is massive and has a bigger impact on your retirement than you may think. 

Image source: Getty Images.

If your employer offers a 4% company match, and you only contribute 2%, then after 25 years — assuming a $50,000 salary at age 40 with a 3% annual raise and an 8% portfolio return — you would have about $200,000, as opposed to about $400,000 if you met the full match. That’s a no-brainer.

You could see that increase even more if you bumped it up even just 2% beyond the company match. A 6% contribution, over 25 years, using the same numbers as above, would result in your contributing about $38,000 more over 25 years. That would be an additional $1,250 per year, but just over $100 per month. If you got paid every two weeks, it would be just over $50 more per paycheck. If you did that, you’d have roughly $500,000 after 25 years.

The one ridiculously simple thing you could do on top of this is to pay yourself every month.

The power of paying yourself

So, on top of that roughly $500,000 you have after 25 years, if you contributed 6% of your salary to your 401(k), you could pay yourself every month — say, $100 toward retirement.

If you invested $100 per month in an exchange-traded fund (ETF) that tracks an index like the S&P 500 or the Nasdaq 100, for 25 years, you would accumulate about $125,000 by the time you retire at age 65. That’s starting from $0 at age 40 and assuming a 10% annual return for the ETF.

Now, $100 per month, on top of what you are deducting from your paycheck to fund your 401(k), may sound like too much to some people. But if you look at it as $25 per week, you could make that up by eating out for lunch just three days a week instead of five — or making your Starbucks at home before work instead of getting it out every morning. Maybe you could eliminate one streaming service that you don’t use as much, or look for ways to bundle internet and mobile or other services. You could also save by not immediately upgrading to the new version of your mobile device when the one you have is perfectly good.

Furthermore, if you get an annual raise, you could take that $100 from it and hardly even notice it in your day-to-day life.

Ultimately, this extra savings vehicle, on top of your main retirement savings fund and Social Security, should help you reach the number you need for a comfortable retirement. And the sooner you start, the better off you will be in the long run.


Click Here For The Original Story From This Source.

National Cyber Security