Here Are 5 Money Moves You Should Make If You Want to Retire by 2040
Retirement feels so far off, and you’ve got financial goals you want to achieve now, such as buying a house and paying off debt. It makes you think saving for your golden years will just have to wait.
Does this sound like a conversation you’ve had with yourself? It sounds so rational, this inner monologue. But it’s bollocks. The truth is, the best time to start saving for retirement is yesterday. Second best, today.
And if you’re already thinking “I can’t afford it!,” tell yourself to shut it, because you totally can. Saving for retirement doesn’t take a heaping sum to get started, and you’re playing the long game, anyway.
But first you have to get in the game.
Want to Retire at 65? Here’s What You Need to Know
If you’re 45 now, 65 is roughly 20 more years of working and saving (emphasis on saving). The year 2040 may sound like the far-off future, but it’s actually coming in hot. You can be ready if you’re proactive about investing money now to live on later.
We’re here to tell you it’s not that hard. Here are six steps to get started:
1. Get a Robot to Do the Tricky Stuff
If you’re saving for retirement with a 401(k), awesome.
But when’s the last time you truly checked in on your account, updated your target retirement date, adjusted your allocations and all that other fun stuff?
Try using a robo-adviser to make sure your 401(k) is on track for 2040. Blooom is an SEC-registered investment advisory firm that’ll optimize and monitor your 401(k) for you.
Your initial account checkup is free, and you can do it online in less than five minutes. This will help you get to know your account a little more intimately. Find out if you’re paying too many investment fees or if you have the appropriate amount of money invested in stocks versus bonds.
If you’re satisfied with the outcome of your initial check up, great! If not, you can enroll in Blooom for $10 a month. (Penny Hoarders get a special rate of $99 per year with the code REEETIRE.) It’ll automatically adjust your 401(k) to best fit your needs all the way up to retirement.
2. Invest Like a Land Baron (Even If You’re Still a Renter)
Investing in real estate is a savvy way to diversify your retirement savings beyond stocks and bonds.
And you don’t have to have hundreds of thousands of dollars. You can get started with a minimum investment of just $500. A company called Fundrise does all the heavy lifting for you.
Through the Fundrise Starter Portfolio, your money will be split into two portfolios that support private real estate around the United States.
This isn’t an obscure investment, though. You can see exactly which properties are included in your portfolios — like a set of townhomes in Snoqualmie, Washington, or an apartment building in Charlotte, North Carolina.
You can earn money through quarterly dividend payments and potential appreciation in the value of your shares, just like a stock. Cash flow typically comes from interest payments and property income (e.g. rent).
(But remember: Investments come with risk. While Fundrise has paid distributions every quarter since 2014, dividend and principal payments are never guaranteed.)
You’ll pay a 0.85% annual asset management fee and a 0.15% annual investment advisory fee.
3. Do Your Adulting for the Day
OK, some real talk.
Part of planning for your retirement is thinking about how you’ll take care of not just yourself but also your loved ones. If you died, what would they live on?
So you don’t have to worry about it, consider a basic life insurance policy to take care of your spouse and children in the event they suddenly couldn’t rely on your income.
A company like Policygenius offers you an easy way to compare and buy life insurance. Unlike traditional providers, this online-only platform lets you apply online and offers instant quotes from top carriers to help you make a quicker decision.
To get your quotes, you’ll just enter some info about yourself and your health. Once you choose a life insurance company, you can apply right online, and a Policygenius rep will give you a quick call to ask a few follow-up questions.
4. Get Rid of Nagging Student Debt Faster
We hear you: Even if you’re committed to saving for retirement, your student loans don’t evaporate.
Give yourself a boost toward paying them off by refinancing. A company like Credible could help you find a lower interest rate on your federal and private loans. Other companies offer similar services, but we like that the average Credible user saves about two interest points on their current federal loans.
Refinancing will generally mean replacing your laundry list of loans with one (or a few) loans that bring all of your student debt under one umbrella.
This could simplify your life with one monthly payment, instead of several. It may also lower your monthly payment, improve your interest rate and give you more time to pay.
It might seem like a small difference, but a lower interest rate can mean a lot of savings over time — which means more money to stash toward retirement.
5. Save to the Max — With More Than 20x the Average Interest Rate
If you’re saving some money for your future, that’s great! But if your savings are in a typical bank account, chances are your money isn’t growing as quickly as it could be.
But there’s a legitimate way to grow it a lot faster than the average person — more than 20 times faster.
It’s with a mobile banking app called Varo. The FDIC reports that the average savings account pays a paltry .08% APY*, but when you open an online checking and savings account with Varo, it will pay you more than 20 times that amount on your savings account.
Oh, and there are no monthly fees.
We know opening a new bank account isn’t exactly everyone’s idea of fun, but Varo makes it easy. You can open an account with just a penny, and more than 750,000 people have already signed up.
This is one of the easiest things you can do for your financial future.