Unfortunately, there are many people who don’t plan for their retirement and find themselves having to survive on a much lower income than they’re used to. It’s important to plan financially for the future, no matter what stage of life you’re at. One of the best ways to ensure you’re provided for in your retirement is to invest money in plans that are likely to result in a substantial return. That way, the younger you start investing, the more money you’ll have in retirement. So, what are the best options for retirement investment?
Retirement Investment Options
Of course, the safest option for retirement is a pension. However, the state pension or Social Security you receive from the government may barely cover the essentials. If you can help it, you don’t want that to be the only pot you have to rely on. The money being put into pensions at the moment reflects the cost of living right now. By the time you’ve retired, the cost of living is expected to increase. Additionally, many corporate employers in the US are backing out of retirement schemes, leaving their employees to fend for themselves.
So, what do you do? Pay into your own pension. There are many ways you can set up your own pension pot and put a percentage of your monthly wage in. Once you’re used to that percentage being missing from your paycheck, you won’t notice it’s gone.
Defined Contribution Plans
You’ve probably already heard of a 401K, but are you making the most of it? The benefit of having a 401K is that you’re not responsible for putting money in. The amount you pay towards it is automatically deducted from your pay, so you never see it anyway. Your employer is likely to contribute too. Many employers match the amount you put in, so you’ve got a 100% increase with every contribution. It’s safe, and you’ll hardly think about it until the day you need it. The only downside is the tax fees whenever you make a withdrawal.
If you already have a full-time job, the thought of property investment may be something that puts you off. However, investing in property doesn’t mean you have to have a huge portfolio. In fact, investing in just one property per year could make you enough to have a decent nest egg by the time you retire. Purchasing fixer-uppers and using your spare time to upgrade the property could give you a great financial return. Similarly, investing in foreign real estate like resale HDB could mean you have access to cheap properties that you can rent for a profit, especially if they’re in the right location. Just make sure you understand the country’s property ownership rules and you qualify to purchase or invest there. You don’t have to take property investment on as a full-time job, but there is huge potential to make big money.
Some stocks have the potential to earn you a significant amount. Whether you invest in a stock that stays steady and you make a small amount often, or you take a risk on a stock that could go either way and come out with a big payment, stocks have the potential to set you up for life. The problem is, you need to be willing to learn about the stock market, rather than just take a gamble. Investing in stocks through ETFs or other mutual funds may be the easier path into stocks. Just like any other kind of business, you need to do your research and continue to gather knowledge so the stock investment choices you make become more of a sure thing.
If there’s a gap in the market, setting up your own business could be something that rewards you in retirement and continues to reward your family after you’re gone. Just one great idea is enough to get a business started. If you’re already working and want the business to be an extra income for you, consider investing in someone else’s business ideas. There are lots of small businesses looking for a cash injection to expand. You could buy shares in the business, be a silent partner or just agree to a percentage of the profits. Just make sure to get everything you agree on down in writing. You need to cover yourself if you’re going into business with someone else.
The majority of savings accounts aren’t worth looking at because the interest they gather is next to nothing. However, there are a few accounts that are worth opening if you’re planning your retirement early. For example, look for accounts that increase your interest level if you’re willing to keep your money in the same account for an extended period; usually more than five years. If you touch the money before the period ends, you’ll forfeit the interest, but if you keep the money in until retirement you can take it out in one large sum or have it in installments in addition to your pension. Obviously, the more you put in, the more you get out.
Cash Value Life Insurance
This is a great option for anyone who wants access to funds during retirement and a life insurance plan. You have to take out a policy, as you would with any other kind of insurance. But, as you pay towards the policy, you build up a cash value. Once the cash value is accumulated, you can use some of the cash during your retirement. For instance, if you were to accumulate $500,000 and use $250,000 during your retirement, your beneficiary would still receive the remaining $250,000 after your death. It’s ideal for stay at home parents or part-time workers with little cash flow per month.
If you’re not good at putting money away for your retirement, maybe you’ll be better at shopping for your retirement. There are many items you could buy that increase in value over the years. For example, antiques, classic cars, statement jewelry and more. If you’ve got a keen eye for valuable assets, it’s worth investing with a view to sell during your retirement. It’s a great way to get constant cash injections when you need them.
Retirement is a stage that should have a financial plan, no matter how far from it you are.