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Retirement Planning 101: How to Budget, Invest and Save for Retirement

Houston Retirement Plans

No matter where you are in life, it's never too late to set a budget to invest and save for retirement. You need to know how to make your retirement possible and when you'll be able to hand in that final notice that you're leaving the workplace. It's time to get serious about your retirement plans.

Understanding the Importance of Retirement Planning

As you work, you'll become accustomed to a certain level of financial stability. You'll want to ensure you can maintain the lifestyle you're used to, but you can't if you depend strictly on your social security checks. You'll need to be familiar with planning to make a comfortable retirement plan by:

  • Estimate the money you'll need to be able to retire comfortably.
  • Identify and prioritize financial goals. This may mean paying off a large loan or saving money for emergencies. 
  • Learn about and choose the retirement plan that best suits your needs. You can use an employer's retirement plan or on your own. 
  • Get comfortable with investments and how you want to approach them.

You can start at any point in your working life, but it's easiest to achieve your goals and stay on track by beginning as soon as possible. There may be some challenges, but you control your path and how you plan for retirement.

As of 2021, the Federal Reserve reported that 27% of people in the US considered themselves to be retired even though 14% still worked part-time. Most retirees were said to be on social security, but 79% had a private source of additional income. This included money from pensions, interest, dividends, rental income, and part-time wages. released information from the 2021 Survey of Income and Program Participation that shows the disparity between generations with retirement accounts. Results showed that as of 2020:

  • Baby boomers (ages 56-64) had the highest percentage of people with at least one kind of retirement account (58.1%)
  • Gen X (ages 40-55) was the next group with at least one retirement account (56.1%).
  • Millennials (ages 24-39) were the next group with at least one retirement account (49.5%)
  • Gen Z (ages 15-23) were the least likely to have any retirement account (7.7%)

The youngest generation has some planning to do, but so does about half of every other age group reported. While the Gen Z group may follow a similar path to previous generations by starting their retirement accounts as they age, there is much work to be done in every generation. It's never too late to take the steps needed to plan for a comfortable retirement. Planning early is ideal, but not planning at all could be devastating in the long run.

Retirement Planning In Houston

Step One: Creating a Personal Budget

Budgeting is the first step to how you'll financially plan for retirement. It's often considered to be the most critical step. When you learn how to budget, you learn how to monitor and control your spending.

Tips on Tracking Expenses and Financial GoalsRetirement Planning Houston

Budgeting doesn't have to be overwhelming or complicated. Here are some tips to start:

  • Gather your fixed expenses (bank statements, credit card statements, pay stubs, and your most recent tax return).
  • Identify essential spending (utilities, food, housing, clothing, health care, transportation, etc.)
  • List non-essential expenses (cable, streaming, cell phones, gym memberships, etc.)
  • Get together your necessary non-monthly expenses (insurance premiums, home warranties, property taxes, school taxes, automobile paperwork, etc.)
  • Put together a list of expenses you enjoy and other non-essential fees you'd like to maintain (eating out, movie tickets, travel, gifts, etc.)

Once you gather your expenses, it's time to add them up. List monthly, quarterly, or yearly costs, depending on how they are paid. Now you can identify what you can and should invest in your retirement.

If you're living paycheck to paycheck without extra funds, it's time to find a way to lower your current expenses. You may have to eat at home more often or take day trips or stay-cations, but the more you put away, the closer you get to your retirement goals.

Tools and Apps to Help With Budgeting

You no longer need to pull out a pad of paper or get ready to create a budgeting spreadsheet to assess your financial situation. Tools and apps make your planning process easy and mobile. compiled a list of some of the best tools and apps available. The list also includes a brief description of each tool or app, helping you select the best one for you.

You can also find several retirement calculators. has one that is free to use with detailed explanations about how it works. 

With the right tool or app, you'll get detailed results that can provide valuable information about your retirement needs. Having your budget information on a mobile device is also helpful if you need to make adjustments.

Step Two: Learning to Invest

One of the most challenging parts of saving for retirement is learning about investing. Beginners need to understand the basics before knowing what type of investing is right for them.

Introduction to Investing as a Means to Grow Wealth

In general, investing helps you to fight inflation. So although prices have increased, your investments should have grown alongside them to ensure you can still afford the lifestyle you've grown accustomed to in retirement. Investing allows earnings to accumulate over time. The money you earn can be reinvested to create additional profits. This means the earlier you invest, the more potential you have to make more money.

Types of Investment Options

You'll have countless investment opportunities as you move through your retirement planning process. These include:

  • Cash Investments: A lowest-risk investment. They earn interest while you wait to invest in another type of investment.
  • Bond Investments: These are like "loans" to businesses or government entities that accumulate interest over time.
  • Stock Investments: You purchase shares of ownership in companies that may increase in value over time.
  • Real Estate: This can be a solid move or risky. The hope is that a real estate purchase will bring in monthly income from rentals or can be resold at a higher price.
  • Mutual Funds: This is when you and other investors pool your money together to invest in various companies.

When you begin to explore investment options, you may need help understanding different options. The best way to learn and gain guidance on retirement planning through investing is with the help of an experienced and qualified professional.

Tips on How to Start Investing, Risk Management and Diversification

The best way to start investing is to get educated and start small. As your money grows, you'll continue learning how to keep your momentum. You can try this on your own, but a professional planner can help you get a solid footing to help you reach your goals. 

As your portfolio grows, consider diversifying your investments. This means that your money will be divided up into multiple investments. This can help your money grow when done with skill and experience. You'll also want help understanding the risk management you may experience in retirement. This can include:

  • Changes to family dynamics, health, and death.
  • Costs of long-term care or nursing homes. 
  • Increasing costs from inflation or economic instability.
  • Changes to public policy programs like social security and Medicare.

Suitable investments for your retirement can make your golden years comfortable and enjoyable. Proper knowledge and experience to help you on your way can help keep your plans on track.

Step Three: Effective Saving Strategies for Retirement

No matter where you stand in your retirement planning process, saving must always be a part of your plan. Here are ways save:

  • Take advantage of your workplace's 401K or 403B company match. If you can, contribute the highest amount allowed by law.
  • If you're a teacher, healthcare worker, non-profit employee, or work in the public sector, you may have the opportunity to claim double retirement plan contributions.
  • File for the retirement savings credit. When you file your taxes and qualify, you can claim a tax credit for retirement plan contributions.
  • If you're self-employed, get your own 401K and a simplified employee pension plan. 
  • You can have a ROTH IRA that allows you to contribute after-tax dollars. This allows your savings to increase while remaining tax-free.
  • Contribute to your health savings account (HSA). These contributions are tax-deductible and can add up over time. 
Retirement Planning 101: How to Budget, Invest and Save for Retirement

Learn essential retirement planning strategies: budgeting, investing, and saving for a secure future. Check these expert tips for a worry-free retirement.

Tips On Maximizing Contributions and Taking Advantage of Employer Matches

  • Know what kind of contributions your employer will match.
  • When you don't put any money into your 401K, there won't be any matching contributions.
  • Your matching contribution can grow tax-free. 
  • Set up automatic 401(k) contributions.

The best way to maximize savings is through any opportunity that makes your money grow. With so many options, consulting with a financial advisor can help you select the best methods for you.

Start Saving for Retirement Now

You need to work towards saving for retirement to maintain an excellent quality of life. Retirement planning takes a lot of work to budget, invest, and save, but it's worth it when you know the year you can hand in your notice at work for good. 

The best way to get on the right track is through Primeway Federal Credit Union. You can schedule a consultation to learn more about retirement planning and start immediately. Retirement can be the most exciting adventure of your life with the help of an experienced professional!

Author Bio

Laurie Masera Garza

Laurie is a digital marketing and social media maven who has more than 15 years of interactive multi-media experience under her belt. When she is not rocking the social media atmosphere, Laurie loves to find Houston’s hidden dining gems, but ask her about tacos. She loves tacos. In her spare time, Laurie loves creating, whether its art or memories.

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