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Do You Know Your Net Worth Before You Save for Retirement?

July 19, 2017
net worth before retirement

As an employee, you must be focusing on your net worth before retirement. There are several reasons to assess your net worth during retirement.

Understanding your net worth gives you better control of finances. You know exactly your expenditures and income. This helps you make realistic and attainable saving goals.

There is a simple way of calculating your retirement net worth. Just add all your assets and minus liabilities. You can benefit by saving for retirement through the following ways;

  • Prevent your net worth from declining after you retire
  • Provide some additional savings
  • Be able to afford significant purchases in the future

How Can you Preserve your Net Worth?

Going back to work can help you preserve your retirement net worth. You may choose a part time job. You may also purchase a rental property. Actively managing such properties can generate additional income.

It always pays in the long run to cut expenses. Foregoing life comforts is one of the ways to save for retirement. If you postpone your grand purchases, you can maintain a simple life routine without going back to work.

Most financial experts agree on cutting your distributions to 3%. If you do this for 5 years, your assets can grow faster. It is also a great way to replenish your net worth in the long run.

It is possible to get your net worth to where you want. Just look for a flexible option which works for you. This is also a great way to adjust your portfolio.

Clever Ways to Save for Retirement

  1. Put 15% of your salary into savings: the longer you save the more compound interest you earn.
  2. Sign up an automatic direct deposit: your employer can tell whether it is possible to portion some of your paycheck to retirement savings account.
  3. Conduct an annual audit of your retirement savings fees: an audit will help you avoid paying too much fees. Be aware of all the fees associated with 401k account.
  4. Don’t make early retirement account withdrawals: there are penalties associated with early retirement withdrawals. This can be up to 10% tax penalty if you withdraw before age 69.

Read 189 clever ways to save money

When Is The Best Time To Save for Retirement?

Most people are confused on what to prioritize when it comes to goals. You may have to juggle between paying debt and saving for retirement. You may still save for retirement and work on other financial goals simultaneously.

Different plans work for various individuals. You just need to create a plan that works for you and stick to it. You may also consult a financial planner. It gets easy to save for retirement when you do so.

Retirement savings can help you succeed in a journey of financial freedom. When you are no longer employed, it is easy to replenish your income. Sometimes the government incentives may not suffice.

You are free to use your retirement savings as you wish.