Americans are delaying retirement longer and longer as lifespans increase and the burden begins to rest primarily on individual savings. It is not uncommon for the elderly to outlive their savings and require the help of family members for support in their last years. Even when people plan carefully for retirement, setbacks can interrupt those plans and cause major problems for people anticipating an approaching retirement. An expensive emergency, for example, can shorten the number of years that you can live off your savings and assets.
Here are seven tips for building sustainable wealth before retirement:
1. Start a side business.
Having multiple streams of income is one of the best methods for building wealth in all stages of life. Contrary to popular belief, you don't have to invest tons of money to start a side business. It can be as simple as offering services on weekends or selling hand-made products online. You can even turn your passions and skills into extra income by offering courses, lessons, or tutoring to interested students.
2. Take advantage of automated investing with apps.
Your bank may provide automated savings programs, but other companies offer opportunities to invest your spare change without meeting with costly financial experts. Apps such as Acorns round up every purchase to the nearest dollar and invest your spare change in the stock market. With Acorns, your portfolio is diversified, and there are no penalties for withdrawing your money at any time. It's a slower way to accumulate wealth, but it's a start.
3. Patent and sell an idea or product design.
It might not sound like the easiest thing to do, but if you have a great idea that is unique or solves a problem, your efforts will be well worth it. Paying for patent searches and filings can cost several thousand dollars, but you could end up making millions when you sell your patent and even more if you can secure royalties. You can then invest the money you make from selling your patent and build even more wealth.
4. Save as much of your income as you can.
Some sources report that you should be saving a minimum of 20 percent of your monthly income. If you're in debt or otherwise in a situation that makes this unreasonable, save as much as you can no matter how small the amount. If you have trouble with discipline, some banks offer automatic savings programs, or you can enroll in a 401K savings plan that deducts a certain amount from your paycheck for retirement.
5. Start saving and investing as early as you can.
The earlier you begin, the better off you will be in the long run. Even if you start small, every little bit counts. People who begin investing and saving in their 20s are better equipped to deal with emergencies, such as last minute medical expenses or getting laid off, than those who put off savings until their 30s and 40s. Even if your early investing isn't enough to generate large amounts of wealth, it will still provide valuable experience and a general starting point.
6. Diversify your investments.
There are not only many different stocks to invest in, but there are also many different ways to invest. It's important to diversify your portfolio in order to minimize risk, and it's also important to be familiar with different avenues of investing. You can invest in stocks, bonds, real estate, gold and other precious metals, and collectibles such as antiques and art. You can also place your money in secure CDs, or join a business as a silent partner. The more you diversify, the less chance you have of losing all your money in one move, and you can decide which avenues of investing you like the most.
7. Spend less than you earn
Spending less than you earn is the first step to building sustainable wealth. It gives you the room you need to save and, eventually, invest your savings in lucrative markets. It may be easier said than done, but there are many ways that people cut successfully costs in their day-to-day spending. Finding cheaper housing, shopping at more affordable grocery stores, buying your clothes at outlet shops, and using coupons are all great ways to save a substantial amount of money over the course of a year. You can also cut cable, cancel magazine subscriptions, and trade in your car for a more affordable model. These are only short-term solutions as your wealth will allow you to increase your standard of living over time.
According to investment advisor representative Rocky Ghoneim, "A significant loss in the years just prior to and/or just after you retire could negatively impact the level of income you receive over the course of your life." While this is true, the intent is not to alarm you. There are a host of ways to prepare for retirement so that you can support yourself for the remainder of your life, even with unforeseeable emergencies.
Many people view wealth as something that is difficult to attain, but that is certainly not the case. If you cut costs, save as much of your income as you can, and make strategic investing decisions, it's possible to accumulate enough wealth to last you throughout your retirement with some left over. Even if you can't afford to put much of your paycheck into savings, there are still a vast number of ways to make more money and create multiple streams of income. These additional resources can then enable you to save what you need to invest and allow for a secure future for yourself and your family.