Solving Your Personal Retirement Crisis

For many of us, the thought of spending our golden years of retirement relaxing, partaking in hobbies, and socializing with the people we care about is enough to get us through several decades of employment. However, the once-stable financial climate for retirees has vanished. Social security is predicted to run out by 2034, employer pensions are nearly unheard of these days, and most Americans aren’t putting enough away for their retirement.

Unless you want to spend your post-working years too cash-strapped to enjoy anything, address your personal retirement with the following tips.

Prioritize High-Interest Debt

People’s situations differ in their complexity, but a commonality of any precarious financial situation is high-interest debt. As elementary as it sounds to focus on these accounts, many people opt to pay the minimum. This may make it easier to keep pace with the rest of the budget, but it’ll extend your time in debt by years, not months.

Of course, financial institutions are well aware of this cycle; it’s their priority to have consumers take on as much debt as possible and keep them there. This vicious cycle that led financial entrepreneur Andrew Housser to start the Freedom Financial Network, a conglomerate of different debt-assistance companies. If you want to put yourself in a favorable position come retirement, then the debt has to go as soon as possible.

Contribute to a 401(k) and/or IRA

What retirement options do you at your disposal? The best way to save for retirement is to contribute to an employer-sponsored 401(k) plan. But if you don’t have that option, then opening an individual retirement account is essential. Many people choose Roth IRAs because the investment gains aren’t taxed. However, you could also contribute to a traditional IRA, which offers tax-deductible contributions.

Develop a Healthy Lifestyle

Many things in life are more interrelated than they seem. An excellent example of this is living a healthy lifestyle and effective money management. Exercising consistently, eating well, and getting adequate rest all contribute to our energy and mental clarity.

When we’re sharper and feeling better, we are less likely to give in to what’s bad for us. These habits, such as drinking, smoking, eating junk food, are as expensive as they are detrimental to our bodies. These types of spending habits impact our monthly budgets in the short-term but also derail us over the long haul via premature health costs and reduced quality of life.

Don’t Overlook Small Windfalls

Each month we come across money we didn’t expect to have. We can spend this money, or we can save it. There’s not a right answer here. Spending money on ourselves is important. All discipline and no reward is no way to live.

However, if we’re choosing to splurge more than save, we’re not getting as far ahead as we could. Whether you’ve made a few bucks consolidating your clutter or earned a promotion bonus by signing up for a new credit card, income is income. Use it to your aid your future self.

Build a Three-Month Emergency Fund

Some financial gurus favor spending discipline over an emergency fund that’s not in some type of investment account. However, life is unpredictable and expensive. Unless you want to move money out of a particular investment, it helps to have a modest amount of money on hand to cover surprise costs. Unless you anticipate a long job search or have assets in your life that carry significant financial concerns, stick to a three-month emergency fund. Once you’ve established that cushion, all your extra money should be going into the stock market and retirement accounts.

As a final piece of advice, never stop investing in yourself. Continually nourishing the things we’re passionate about not only improves our morale but it also gives us more income-earning options down the line.

This isn’t to say that any area of self-investment should be profitable. Instead, it means that following our heart and innate interests gives us the best chance to succeed no matter what we’re ultimately looking to accomplish.

Keep that in mind as you integrate the rest of these strategies to solve your personal retirement crisis.