When planning for retirement, two important questions always come up: When to start saving and how?
When to Start Saving
Ideally, you’ll want to start saving for retirement early in your 20s but if you wait until you're in your 40s, it’s still not too late. You will have some challenges unique to your age whenever you start, and where you are in life, but whatever stage in life you are today, it’s important to get started.
How to Start Saving
How to start saving for retirement? First, build up cash reserves. To reach a goal of early retirement, you will want three to six months of your normal income in an account that's safe and liquid. And you’ll want to have an account for planned expenses.
A Kasasa Saver* from Honor Bank is a good start. Kasasa banking accounts are designed to help you make and save money. These accounts also offer some options:
- Kasasa Cash* is free checking paying you a healthy interest rate many times higher than the current national average. It is all about making your money work harder for you. It’s your money after all!
- Kasasa Cash Back* actually pays you for using your debit card. It’s a free checking account that pays cash back on everyday debit card purchases. No points, no category restrictions. Just cash.
- Kasasa Saver* is a free account that puts saving on autopilot. Your ATM fee refunds and interest or cash back from Kasasa Cash or Kasasa Cash Back are automatically deposited into this account, which also gets high interest, making saving super easy.
All Honor Bank Kasasa accounts give you nationwide foreign ATM withdrawal fee refunds and no monthly service fees.**
Other tips for financial freedom include:
Reduce your debt. If you have credit card debt, student loan debt or medical bills, your next priority should be to reduce and eventually eliminate that debt so that your income can be channeled into saving and investing for the future.
Max out your employer provided retirement plans. Save at least as much in your 401(k) as your employer matches. Your money doubles just because of the employer match. It’s important to find out how your pretax contribution will impact your cash flow because you may be able to contribute more than you think. Check with your employer or a tax consultant for more information.
Make your own retirement plan, in addition to saving for retirement at work. You can also consider making the maximum allowable contributions to a Traditional Individual Retirement Account (IRA) or a Roth IRA, depending on your income. Check with your personal banker for the best IRA for your situation.
Save for college tuition as early as possible after your kids are born, even if you can save only a small amount. Hopefully, you can increase the amount you save for college as your income rises. Look at the 529 college savings plan and prepaid tuition programs that allows you to lock in tuition at current rates.
Finally, it is important to insure your family. Term life insurance, especially for a healthy person in his or her 40s, is relatively inexpensive. Check your health insurance, home or renter’s insurance, auto insurance and life insurance policies to make sure you have the right coverage. Consult with your employer and insurance agency for more information.
The most important tip for discovering your financial freedom and planning for retirement — start now!
Here are all the good things to know about Kasasa Banking!
**Non-maintenance activity fees, such as fees for paper statements, may apply.