We can all agree that we’d like to retire rich, happy, and peacefully. Right? But, what are you doing to secure yourself for the future?

Scratch that. At what age would you like to be retired? Is 40 ideal for you? How about 70? When would you like take a back seat from the rat-race and enjoy a comfortable retirement instead?

Everyone wants to retire happy, and in a cozy home away from the craze we are currently experiencing but, are you taking active steps to secure your future? The general anti-avoidance rule aside, what small steps are you taking now for bigger results later on?

Unless you intend on working those long and sad hours until your old and unable to stand without support, you have to take measures now. Be serious about saving.

You might argue that you could drop dead at any time and savings won’t matter but, what if you live long into your 90s. Will you be happy with your recklessness?

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So, even with the unpredictability of life in mind, envision your perfect retirement. What does it look like? Magnificent, isn’t it? Well, that’s the dream. Now, work on actualizing that.

The power of the compounding effect

The compounding effect should be the yardstick with which you run your life if you want to retire rich. The compound effect is the principle that the decision you make shape your destiny. The small decision you make daily will lead you to the life you desire or your disaster.

The practical, tough and effective steps to retiring rich. These are the things you should start doing to build your retirement fund.

Cancel unnecessary expenses

Is your money never enough to meet all your need? Do this. Go through your expenses and highlight all those needs taking up your money. Chances are, your budget could allow you to save more for retirement than you think.

To uncover where that money is, be honest with yourself. As you review your bank statements, look out for expenses that weren’t necessary. You’ll come across numerous loopholes or retirement leeching expenses.

Eliminate the club memberships, subscriptions, as well as the automatic charges for services and events you’ve never benefitted from.

You could also save a lot on cable and the internet, if only you compared pricing with competitors. You will realize that you can save a lot of money, and increase your retirement contributions, only if you check yourself and your expenses.

Other expenses eating into your retirements include:

  • Bank fees. Banks seem to have several hidden fees. You might want to ask for refunds for your monthly fees.
  • Retirement account fees: while trying to save, you may be paying more to the institution than your future. Watch out for associated fees like investment fees, administration fees, and other associated fees. Note that if you incur high fees of up to 1.5 percent, you will lose up to 28 percent of your retirement money – that is not the case if you pay 0.5 percent in fees.
  • You may also be losing money to your landline phone service or the credit monitoring services. You also lose money to free trials, snack at movie theatres, taking sodas with meals, pet treats, or overspending on holidays.

Start Early

As you visualize your perfect retirement, make sure you have some money in the save. If you have not started saving, start immediately. Your monthly contributions, however, small will earn compound interest and grow with time. If you have more time, you will have saved a lot more by the time you retire.

Since the money saved in the retirement fund earns interest, the money you save now, or as early as your 20s will earn good interest, and your cash returns will be remarkable.

What happens if you start saving late? Well, there is only one way around that, try as much as possible to make up for the lost time. You will have to contribute a lot more to catch up, or to have a decent amount of money by the time you hit 65 but, the extra effort will be worth your while. You can always get the extra cash from changing your lifestyle.

You shouldn’t have a choice, but to save

You need to ensure that you are saving to your retirement monthly, or weekly, automatically, without fail. An automatic saving system ensures that you don’t have a choice over the amount of money going to your savings account.

To simplify savings, have a standing order with your bank to ensure that a specific amount of money goes to the retirement fund every month when the paycheck is processed. Do this for your 401K or any other retirement account you may have.

Make sure that you are saving enough

Yes, you might be saving less money than it is ideal, considering your retirement plans. An excellent place to start is by having the amount of money you need saved up written down and then work backward. By this we mean, determine the amount of money you should save annually (or monthly) to meet your retirement goals.

Ideally, you should save 10 to 15 percent annually for a comfortable retirement. You may not do that too well when starting out hence the need to start small and increase your savings rate annually.

So, what tells you that you aren’t saving enough?

  • You have no clue what your savings rate is or how much you should have saved up by the time you retire. How much of your income is going to retirement? You need to know that rate if you are ever going to reach your retirement goals. If your savings rate is low, then you aren’t saving enough to make your retirement the golden age.
  • High expenses. If you, are spending too much of your income, it means that you are not saving enough. As mentioned above, you need to save 15 percent of your annual income.
  • Credit card debt. That is a red flag, and you should change your spending habits. If you cannot handle savings and debt once, pay off your debts first and then start saving.
  • You are unable to pay your medical expenses. Your medical bills will grow bigger as you age. If you cannot pay those bills now, you will have problems later on.

Contribute the maximum amount of your annual IRA contribution limit

Be smart and contribute the maximum possible contribution to the IRA. In case your company offers to match the 401k contributions, be smart and contribute to the maximum. That is the easiest way to grow your retirement fund and to earn free money.

You should never leave free money on the table and failing to match your 401k contributions is a lot like leaving money on the table. With most companies willing to match 50 cents for every dollar, you shouldn’t pass on that opportunity.

If you don’t max out your contributions, you will be out of luck and catch-up contributions may not work too well,

IRAs are a big deal because they let you enjoy tax-deferred or even tax-free growth, depending on the type of IRA you use. In turn, it lets you use strategies like asset placement.

An example is Roth IRA which is the closest thing to the perfect tax shelter. As long as you stick to the rules, you can avoid paying tax on our dividends or capital gains. It is also protected from creditors in case of bankruptcy.

Raises and bonuses go to savings

Did you get a raise? Well, there is an opportunity to save more towards your retirement.

Since you are already making ends meet on your current salary, the extra money should increase your retirement account, not your bank account. You are setting yourself up for an uncomfortable retirement if you are going to change your lifestyle because you earn more.

Be a risk taker

The most successful people, the men, and women living in fancy homes after retirement took enormous risks. While stock mutual funds are good plans to start with, you could increase your returns by putting your funds into the real estate and bond funds.

Target-date funds let you adjust your allocation of bonds and stocks as you get close to retirement.

As you take risks, learn to diversify your investments. You cannot rely on a single stock because you could lose it all in case of market changes. Diversify your risks and investments by mixing bonds and stocks or putting your money in mutual funds.

Use Rollover IRA to avoid early withdrawal taxes and penalties

Unexpected things happen in life, and you may have to cash out your retirement early, but, you shouldn’t cash it out. Doing so may save a life but, it will cost you. To avoid penalties or taxation, you should use the rollover IRA or the new employer’s 401k plan (if you switch jobs).

This plan will save you extra costs and, your money will continue working for you tax-free. Therefore, you will reach your retirement a happy soul with enough money saved up.

Invest in real estate

Most, if not all real estate investments are income generating. If you are looking for a way to save more, you should invest in an income-generating real estate. You have to be careful about the purchase and financing the property.

You should also use your surplus funds to buy more productive assets, and to avoid liabilities. You can take up equity stakes in productive businesses. Buy the asset at an intelligent price and wait for the value of your investment to appreciate.

You have to think long-term, in your investments.  Even if stocks lose value, make sure that you have invested with a  stable company so that you don’t lose sleep over those small market changes. Big companies considered excellent business prevail even in the harshest economies.

Find more ways of earning extra money

Can you take on a side gig to earn more? If you can find a second job, or if you can earn from your hobbies, take them up. You can always direct the extra money to your retirement savings account. Alternatively, you could use the money to pay off debt faster.

Since side gigs are considered part of self-employment, your contributions will go to solo 401K accounts.

As you look for more ways of earning more, you might want to downsize as you approach retirement. You shouldn’t buy a big house that comes with an even bigger mortgage, maintenance and utility costs.

But, if you want to retire in a big home, then you have to change your spending habits now, to afford that big lifestyle after your retirement.

Looking to save more and reduce expenses? Lower your cost of living by relocating. You can keep your costs low at a significant rate just by living in an affordable neighborhood.

Can you find an employer offering better retirement plans?

While employers offering 401k matches are good, the employers who create lifetime streams of retirement income are better. Some of the best Fortune 500 companies offer defined benefit plans to their employees.

A company with a great pension plan beats that one that pays higher salaries especially if your retirement plans and savings accounts aren’t doing too well.

Stop competing with your peers or your neighbors

While you may have rich neighbors and friends, you shouldn’t think that you should do things to match you to them. Spend what you can afford. You never know, you saving more may make you the rich retired man or woman.

Seek professional help

You may know how to save well but, you may even have more money saved up by the time you retire if you bring in an investment expert. A professional will help you create a financial plan and even guide you so that you stick to the plan. Look for chartered analysts or financial planners.

Don’t gamble with your future

It isn’t given, you may not reach 65 but, you should save up either way. You don’t want to retire with regrets or be working after 70.

Also, don’t rely on social security and always have enough money saved up to last a few months.