Don’t let a low income prevent you from building a retirement nest egg
It’s extremely difficult to save for retirement when your paychecks are barely big enough to cover your basic expenses. But there are a variety of strategies you can use to build a nest egg, even on a small income. Here’s how to best prepare for retirement with a meager salary:
Find a job with good retirement benefits. When deciding where you would like to work, make sure you consider the retirement plan as part of the compensation package. “If they offer a retirement plan, that’s a job that should probably be looked at a little harder than one that does not have a retirement plan,” says Sam McPherson, a certified financial planner and CEO of McPherson Financial Advisors in Brooklyn, N.Y. “If you participate and you get a match, you are effectively getting a raise beyond what their quoted salary is.” For example, if you are choosing between two positions that each pay $35,000 per year, but one offers a 401(k) match of up to 3 percent a year, you could potentially earn $36,050 at the job with the retirement account if you save enough to get the entire match, $1,050 more than the job without the 401(k) match.
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