Saving for retirement is one of those things that most people realize is important, but for many people figuring out how to tuck a little money aside for old age while living paycheck to paycheck is illusive. One way to save a little at a time towards your retirement is IRA investments.
What are IRA’s?
IRA stands for Individual Retirement Account. These types of accounts are higher interest earning TAX free accounts that once you invest; there is a penalty for early withdrawal until the age of retirement, or for qualifying emergency situations.
IRA’s come in a variety of formats with two of the most popular being the traditional IRA and the Roth IRA; each type of IRA has its own conditions, interest accrual rates, and stipulations, so research them carefully to find the correct IRA for your current situation and future needs.
How to fund your IRA
When you are trying to figure out how to pay the bills each month it is difficult to think past the present to see the future. However, if you want to have the future you dream of, this is the perfect time to think about retirement. Here’s what to look for:
- Take this moment to look at your complete budget, looking for ways to cut back on expenses. The less you are spending the more you can put into savings.
- Evaluate how much money each month you are actually putting into your savings or retirement accounts. If the answer is nothing, consider making your IRA an actual bill, where as you put a certain amount into your savings or retirement accounts every month. It can be as little as $5 as long as it is every month.
- Use direct deposit or automatic online bill pay to help you remember to put your monthly savings amount into savings. By treating your savings like a bill, you train yourself to think of this expense as a required expenditure similar to making your mortgage or rent payment.
- Start a coin jar. Most of us have a pile of coins laying around in the bottom of a purse, or the console of the car. Why not make these coins work for you? Find a large jar, and make it a habit to place your coins in the jar at the end of the day, or week. You will be surprised at how quickly it adds up. Then at the end of the month as you are managing your budget take out the jar and count up how much you have saved. If it is over $20 take it to the bank and deposit it into your interest earning savings or IRA account.
Saving for retirement is one of those life challenges that sometimes take a creative mind to find the money to fund the expense. However, when good saving habits are started at an early age and continued consistently over the years, you can still build a decent retirement without living on Ramen Noodles every night.