How to set yourself up for the perfect retirement

Whether you're a 20-something year old or middle aged, retirement should be on your mind.

As helpful as it is to set aside money in a 401(k) and Individual Retirement Account, there's always more you can do to set yourself up for a comfortable retirement.

Here are some ways to achieve that goal:

Cut back on investment fees

If you have a 401(k) and IRA, you know how investments can cost you quite a bit in fees. If you make an effort to lower those fees, you have an opportunity to boost your retirement fund.

U.S. News & World Report explained the average mutual fund expense ratio was 1.25 percent in 2013. This means that if your retirement fund is at $945,000, fees will actually lower your nest egg to about $757,000. In other instances, mutual fund ownership fees can actually be as high as 4 percent.

You also have to take transaction fees and taxes into account. The reality is these hidden fees can come back to bite you when you're deep into retirement. To avoid those extra costs, you should watch investment fees closely to ensure that you're receiving proper value and guidance.

Seniors laughing.Set yourself up for the perfect retirement.

Spend less before retirement

The lifestyle you have today will shape your retirement. Sure, you might be setting aside about 10 percent of your annual salary into retirement funds, but how are you spending the rest of your money?

Living below your means in the present will ensure your nest egg is stable in the future. You should strive to not only live within your means, but below them as well.

Budgeting is key because you still want to enjoy life, but you need to avoid piling up the debt. Only spend money you know you have and make an effort to save greater portions of your paychecks if possible.

Utilizing internet banking tools from Landmark Bank will help you track spending and make cuts where necessary. Analyzing your spending is important to living below your means while not totally living a frugal lifestyle.

Let money make you happy

Money doesn't buy happiness. Or does it?

As previously discussed, you need to rework your budget to emphasize saving as much money as possible. But when you do, you should strive to spend money in a meaningful way.

According to a research paper from Harvard University, smaller, frequent purchases can actually bring you more joy instead of large, extravagant purchases. This means that buying coffee from a local shop may be better than spending all of your money on an expensive car.

Harvard researchers explained that big purchases, such as a luxurious car, don't often result in extended pleasure like frequent purchases do.

Additionally, spending money on less expensive items ensures you don't stray from your budget. Yet this doesn't mean you don't have to eliminate big vacations or purchases from your life; just don't always spend large sums of money on material goods that might not provide extended happiness.

Budgeting now so you can take pleasure in the smaller things will help you divert more money into retirement accounts. And once you hit retirement, you'll find joy reflecting on your life experiences while looking forward to new ones that are possible because of your large retirement fund.

Planning for retirement is a process that takes time. That's why you should change up your lifestyle now to ensure you set yourself up for the perfect retirement. Cut back on mutual funds, make smaller (and cheaper) purchases and budget accordingly.

Investment products and services are not FDIC insured, not insured by any federal government agency, not a deposit or bank obligation, not financial institution guaranteed, subject to investment risk, including potential principal loss. 

For more information about smart ways to manage your finances, contact Landmark Bank.

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