Saving for retirement is something that every financially secure person will suggest, but is very hard to do for people with debt or limited extra income. Not everyone has the means to immediately begin saving for retirement, but there are steps you can take to make positive changes and work towards being able to save money sooner rather than later.
The earlier a retirement fund is created, the more value it will have in the future. An estimate done by CNN money says that if you place $3000 each year into a retirement fund for 10 years, starting at age 25, the investment will be worth more than $338,000 assuming a 7% annual return. Before you can start saving however, you need to neutralize bad debt-inducing habits.
Examples of Bad Debt-Inducing Practices
- Taking on risky loans: Certain loan providers offer loans with excessively high interest rates or embedded fees, and often target borrowers who do not qualify for traditional loans.
- Not repaying debts: Taking on loans that you can’t afford and continuing to not pay them back will cause the amount of debt to increase, through late fees and increased interest rates. Getting behind on payments is a good way to start snowballing debt.
- Payday loans: These kinds of loans are notorious for trapping borrowers into downward spirals. Payday loans often come with higher interest rates and charge late fees if payment is not received by quick deadlines. These deadlines can multiply, meaning that if instead of missing the two-week deadline, it takes you two months to repay the loan, you will have to pay four times the initial interest.
Some lenders may be breaking the law with high interest rates and hidden fees or clauses you were not aware of. A Washington, D.C. debt management attorney can help you know if you are a victim of illegal lending practices. If you alter your spending habits and have some leftover money to invest in a savings account, you may try some of these saving techniques.
Ways to Save for Retirement
- Company sponsored retirement plans: many employers have retirement plans and stock options for employees. However, you may not be automatically enrolled, contact your employer to find out how to get started.
- Stocks: Investing in the stock market can be lucrative if you give it enough time. Financial service companies can get you hooked up with a successful stock portfolio.
- Individual retirement account: These are retirement plans for individuals set up by a financial institution that invests in several different areas. They also offer tax advantages.
Saving for retirement may not be possible for people with serious debt issues. If you have debt you can’t seem to get rid of, a Washington, D.C. bankruptcy attorney can help you settle your debts and get you on the right track to start saving for your future.