Top tips to improve your financial literacy
By Curtis Ray | Point of View
Retirement planning is financially beneficial for Americans, yet many people aren’t educated on this topic unless they are in a job that offers retirement plans. There is always room to increase financial awareness and analyze your current financial situation.
The below insights will progress your retirement knowledge, the future of Social Security and advice for saving for the future are helpful for beginners and experts alike.
Retirement savings are essential
It is never too soon to begin saving for your future. It is essential that anyone hoping to retire is mindful of their savings accounts while avoiding high debt levels. Increasing financial literacy opens the door for you to become confident in where you’re investing your money and assures that you are creating a foundation for your future. The best way to get started is fully understanding what your financial situation is and then effectively use various financial skills such as personal financial management, budgeting and investing.
Changes in Social Security
The future of Social Security remains uncertain as there are speculations of funds diminishing and talks of age adjustment. As the life expectancy of Americans increases, there will be smaller working populations and an increase of retirees. The reality is that Social Security will not run out of funds, since the program is expected to cover 78% of scheduled benefits, but if the gap isn’t filled benefits could be cut.
My advice to those relying solely on Social Security is to be aware of the potential that benefits are cut after 2035, tax rates rising and a change in retirement age. If you are looking to explore Social Security alternatives, I suggest exploring other investment opportunities. A few that come to mind are secure compound interest accounts or real estate which can bring you more security, better options for passive income, and early retirement options.
Explore various retirement savings plans
One of the most common retirement savings plans is a 401(k), which is a company-sponsored retirement account to which employees can contribute their income, while employers may match contributions. There are two basic types of 401(k): traditional and Roth, which differ primarily in how they’re taxed.
While 401(k) and Roth plans are deemed the most popular retirement savings options in the U.S., they are not the only tools that can increase retirement savings. Compound interest accounts are a way to accelerate your retirement savings as well.
Compound interest increases the growth of your savings and investments over time and occurs when you add the earned interest back into your principal balance, which in turn earns you more interest and compounds your returns. Compound interest has the power to grow your retirement fund faster as you earn interest on your interest. Secure compound interest accounts, which have guaranteed security against market risk, are gaining popularity because of the increased volatility in the market recently. If you would like to learn more, local financial companies like MPI Unlimited can provide more information on the benefits of this financial tool.
Increasing your financial literacy will help you reach your goals and lead you to financial freedom. There is a plethora of ways to make smart financial decisions through creating a budget, setting savings goals, and more.
Editor’s note: Mr. Ray is CEO of MPI Unlimited and inventor of the MPI® Secure Compound Interest Account. As a retirement expert, his mission is bringing simplicity to financial education to help hardworking people maximize their savings to achieve their dream retirement.
