Golden years require some gold.
Are you saving for retirement? You should be, even if your golden years are more than half your lifetime away. The sooner you begin, the less you'll need to save each month.
Too many people have no idea how much they'll need to live comfortably through retirement. According to the U.S. Department of Labor, the number of Americans who have calculated, and not just assumed the amount, is fewer than half. The reality might be shocking.
It's never too late to start saving, and it's also never too early. But you'll need a budget to show how far you've come and where you're headed.
First: Calculate How Much Retirement Savings You'll Need
Expenses might not be the same at retirement. Maybe your home will be paid off by then, but the cost of living will certainly be higher. If you want to travel, you'll need more in savings. Calculating retirement funds takes a lot of consideration. The safest approach is to err on the generous side, since having more than you need can never be a bad thing.
There are many types of retirement savings calculators around. Kiplinger has one that does most of the work for you, and includes fields to include the amount you are scheduled to receive in Social Security benefits and investments. Fill in the blanks, and the calculator shows the full amount you'll need in savings.
Once You Know Your Goal, You Can Start Your Budget
Retirement calculators usually produce an enormous dollar amount. Replacing 80 percent of a modest yearly salary might require a million dollars in savings or much more, if there are no other anticipated sources of income. That's a lot of savings, but spreading it out over many years means your monthly contribution won't be as much.
This is the time to find extra money in your budget to devote to retirement, but sometimes there doesn't seem to be anything left after the bills are paid. That's where budget software such as Mint.com products can help.
By opening an account and entering all of your financial information, Mint products can help you find money and suggest ways to allocate it to savings. For example, an overview of your expenses and income might reveal an imbalance that you can correct.
Mint.com can expose spending patterns that you weren't aware of, and show you how they add up monthly. Mint can also make suggestions if you're spending too much in interest based on another lender or credit card that offers a lower rate. Every penny you find can turn into valuable retirement savings.
Now is the best time to get on track.
Consider Investments to Supplement Retirement Savings
As the old saying goes, your money should work for you. Putting money in a cookie jar leaves exactly the amount saved. In an interest-bearing savings account, there would be slightly more. If you really want to watch your money grow, think about investing.
U.S. News and World Report says investing is all about diversifying, and the U.S. Department of Labor agrees. Diversifying gives your money the chance to experience a lot of growth potential, without the risk associated with keeping it all in one place. International investments might be worth consideration, and a balanced portfolio usually includes both stocks and bonds.
Investments always carry risk, but some are much riskier than others. When you are young, those chances are easier to take. There are still years ahead to recover from stock market drops and other losses. As you grow closer to retirement, switch to less risky investments to keep your money safer.
Retirement is meant to be enjoyed. The best way to get the most out of it is by planning ahead, and sticking to those plans over the long haul.
Mint.com offers budget products that help make budgeting and saving simple, so you can be sure you're always on top of the game.
Sign up for a free account today and see how Mint.com can help your retirement plans.