Saving for retirement is a challenge for everyone, but it can be especially difficult if you don't own a home. Without the equity from a home, you'll have to get creative in order to build up your nest egg.
In this blog, we'll take a look at how to save for retirement when you don't own a home. We'll discuss the importance of saving early and investing in yourself and your future. We'll also offer some tips on choosing the right life insurance policy to help you build your nest egg.
Let's get started!
Saving for retirement can be a challenge, but it’s not impossible. Here are some great tips for building your retirement nest egg when home ownership is not an option.
One of the most important things you can do for your future is to start saving for retirement ASAP. That’s because the earlier you start, the more time your money will have to grow through compound interest.
Compound interest is when you earn interest on your original investment plus any previous interest earned — it's like earning money on your money!
This can cause your money to grow exponentially over time. For example, if you invest $1,000 at a 5% annual rate of return, after 10 years you'll have $1,628. After 20 years, you'll have $2,653. And after 30 years, you'll have $4,321.
As you can see from this example, compound interest can help your money grow significantly over time. That's why it's so important to start saving early!
In addition to starting early, another key to saving for retirement is to create a budget and stick to it.
When creating your budget, be sure to factor in all of your monthly expenses including rent/mortgage payments, food costs, transportation expenses etc. Only once you know how much money you need each month to cover your basic living expenses, can you begin setting aside money for retirement savings each month.
If you're not sure how to get started, there are plenty of resources available to help you set up a budget. Once you have a plan in place, it will be much easier to make room in your budget for retirement savings.
Investing in yourself is one of the best things you can do when trying to build up your nest egg — after all, YOU are your greatest asset!
…But just to be clear, when we say, “invest in yourself”, we’re not saying take a day at the spa, or buy that ice cream with the chocolate caramel chunks! (...Though mental health is important too!)
What we’re saying is to grow your worth in talents. That means taking courses (especially ones that will improve or update your skillset), networking with others in your industry or field, and attending industry events and conferences.
Investing in yourself not only makes you more marketable and increases the likelihood of earning a higher salary, but it can also help you reach your retirement savings goals more quickly.
In other words, the more money you earn, the more money you'll have available to contribute to savings each month. Cha-Ching!
While you’re still saving up money, or you’re paying off debt, one of the best things you can do for yourself is getting an insurance policy. That's because if something were to happen to you or your loved ones, you get full financial protection without needing to pull away from your nest egg savings.
Admittedly, it can feel a bit overwhelming to know which policy you should get, as each type of policy provides different benefits depending on what stage of life you're currently in. But if you only need protection while you’re saving your nest egg, a term policy could be a great option as it provides coverage for only as long as you need it.
For most young adults and families just starting out, a term life is often recommended. Its flexibility and affordability also make it a great choice for people saving money compared to other types of policies.
However, if you’re still not sure, you could also use our handy-dandy term life insurance calculator to find out exactly what coverage is best for you!
Saving for your retirement nest egg is a challenge, but it's not impossible — even if you don't own a home!
The most important thing is to get started early and be creative in how you build up your nest egg. Investing in yourself and taking out a life insurance policy are two great ways to do just that.
We hope this blog has given you some helpful tips on how to save for retirement when you don't own a home. Remember, the earlier you start saving, the more time your money will have to grow!
And to protect your nest egg savings before you retire, click the button below!