Manage My Budget

It’s quite common to base a retirement savings plan on the vacillations of financial markets, but this urge should be curtailed. Just because there is a bull market and it seems like the time to invest (and not save) has arrived, the best strategy is to make an extra contribution to a retirement plan and invest modestly. Too often the selling begins when prices start heading south.

The best strategy when it comes to saving for retirement is to somehow shrug off any economic indicators you consider pertinent. After all, at the end of your career, it’s what you’ll be left with. How can you keep one hand contributing to the fund while the other fends off any present trouble in your finances? Here are five tips for making your retirement the joy it should be.

1. Maintain the ratio of money spent to money saved, even when it seems close to impossible. In the hardest times, it’s near impossible to keep socking away that 15-20% you may have set as a goal for monthly retirement funds. However, even those working without salaries – who are thus hit extremely hard by economic downswings – should remain steadfast. Even when all personal spending has seemed to disappear, there is that incredible light at the end of the tunnel.

2. Table the debt servicing for a slightly later date. When income starts to diminish, it’s common to start buying more on credit. This trend will lead to increased guilt and could end up tugging at funds normally reserved for retirement savings. However, the best plan is to let the debt rest for a little bit while your income improves. Keep the money going into a retirement plan, as the benefits of that diligence will outweigh negatives of short-term interest accumulation.

3. Re-examine your original retirement figures. In certain instances, it will come to a financial advisor’s attention that a client is actually saving too much in a retirement plan. The result is not an abundance of cash in retirement, however. Because of some tax structures, retirees will end up seeing less money in the end. Make sure your calculations are accurate so aren’t doing yourself an injustice later.

4. Don’t be constricted by any arbitrary guidelines. While the traditional line of thinking is that age 65 is the time to quit, some unfortunate swings in the market may make that proposed date inconvenient. If so, you could see immense benefits in working until age 67, or staying on part-time for several years. It may be a way to ease out of the social circle of work while securing your retirement savings for good.

5. Use the tax-friendly resources while you have them. Tax-protected plans are one of the best ways to keep retirement plans going. The trick is you have to use them. Over 30% of those with access to these plans are not using them. Setting up automatic deductions is an excellent way to keep it going every month, regardless of what’s happening in the markets.

While difficult economic times call for compromise in so many areas of life, your retirement savings should never be the target.

Gnifrus Urquart realized you need to start saving for retirement as soon as you can. This is why he started his own DIY superannuation and looks to Premier for Self Managed Superannuation Administration.

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