A comfortable retirement isn’t built overnight and it doesn’t require a six-figure salary. What makes the difference are the small habits you build over time. Whether you’re in your 20s or 50s the right habits will help you build the kind of retirement you want.
The 50 habits below will set you up for a comfortable retirement.
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Saving and Investing
1. Start saving and investing early. Time is your greatest asset. The earlier you start, the more time your savings and investments have to grow.
2. Automate your finances. Set up automatic transfers to your savings, investing and retirement accounts.
3. Build an emergency fund. Save at least three to six months’ worth of living expenses to avoid tapping into your retirement accounts during emergencies.
4. Take advantage of employer 401(k) match. This is free money. Always contribute enough to your 401(k) to get the full employer match.
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5. Contribute to an IRA. Use a traditional IRA or Roth IRA to grow your retirement savings tax-efficiently.
6. Diversify your investments. Don’t invest in one asset class. Spread your money across stocks, index funds, ETFs and bonds to reduce risk.
7. Invest consistently. Use dollar cost averaging to invest consistently regardless of where the market goes.
8. Rebalance your portfolio regularly. Review your portfolio year and adjust asset classes based on your risk tolerance and goals.
9. Understand your risk tolerance. Pick investments that align with your risk appetite.
10. Avoid emotional investing. Stick to your plan despite the market swings.
11. Increase your retirement contributions annually.
12. Don’t panic during market downturns. Don’t panic sell your investments when the market is going down.
13. Stay invested long-term. Time in the market beats timing the market.
14. Shop for insurance annually. Compare rates for auto, home and health insurance to ensure that you’re getting the best rates.
15. Use catch-up contributions. Contribute more to your retirement accounts once you hit the age of 50.
16. Avoid early withdrawals. Don’t tap into your retirement accounts unless it’s an emergency that deserves the withdrawal penalty.
17. Harvest tax losses. Strategically realize losses to offset gains and reduce current tax liability
Spending and Budgeting
18. Track your expenses. Know where your money goes so you can cut back when needed.
19. Create and stick to a budget. Without a budget, you won’t know how to allocate your money. It also helps keep spending in check.
20. Pay off high-interest debt. Prioritize paying off high-interest debt like credit cards, followed by other debts.
21. Live below your means. Spend less than you earn to free up cash for savings and investments.
22. Avoid lifestyle inflation. Don’t increase your spending when your income increases.
23. Shop around before major purchases. Make sure you’re getting the best possible deal out there.
24. Cut unused subscriptions to save more.
25. Cook at home to save money.
26. Shop with a list. This helps prevent impulse buying and stick to your budget.
27. Wait 24 hours before large purchases to prevent emotional spending.
28. Treat yourself tax. For every item you splurge on, transfer the exact same amount to your savings.
29. Buy quality items that last rather than buying cheap stuff repeatedly, costing you more over time.
30. Review your bank statements monthly to know where you’re overspending.
31. Use cash back and rewards strategically. Don’t overspend simply to get cash back and rewards.
32. Use credit cards responsibly.
Income and Career
33. Negotiate your salary and ask for a raise to increase your income.
34. Maximize workplace benefits like professional upskilling.
35. Build your network with professionals to open doors for better opportunities.
36. Invest in your education for better career opportunities.
37. Create multiple income streams. Taking on side hustles can boost your income.
38. Use windfalls wisely. Channel bonuses and tax refunds to your retirement accounts.
39. Plan career transitions carefully. Consider timing, finances and benefits when changing jobs to maximize long-term wealth building.
40. Consider working longer. Delaying retirement for a few years can give your retirement savings a boost.
Retirement Planning
41. Set retirement goals. What do you want your retirement to be like?
42. Estimate your retirement expenses to determine how much you need to save for retirement.
43. Maintain good health. Healthy habits can help reduce medical expenses as you age.
44. Maximize your HSA. Health Savings Accounts offer better tax benefits and can function as retirement accounts after age 65.
45. Track your Social Security record. Make sure your earnings history is accurate for future benefits.
46. Delay Social Security if possible. Waiting until 70 boosts your monthly benefits.
47. Talk to a financial advisor. Get expert guidance whenever possible.
48. Consider Roth conversions. Convert traditional IRA funds to Roth accounts to reduce future tax burdens.
49. Create a will. Ensure your assets are distributed to your heirs.
50. Review estate plans regularly. Review every three to five years or after major events.
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This article originally appeared on GOBankingRates.com: 50 Habits That Will Prepare You for a Comfortable Retirement
