If there’s one thing that throws people into a spin, it’s talk of retirement. Most employees start thinking about hanging up their hats in their fifties or sixties, but the sooner you start saving, the more time your investment has to grow.
What Age Should You Start Thinking About Retiring?
It’s never too early to start planning for your retirement. You not only get used to the idea of putting aside some money each month, but you attain your goals faster.
Government benefits also tend to be too small for most retirees, so you can’t depend on the support after you retire. You need to start thinking of smart ways of saving towards your golden years and start saving as soon as you launch a career.
If you are thinking about your retirement readiness, there is so much more to consider than your current retirement savings.
Below we’ve included a short retirement readiness checklist to help you plan for the future. Compare it to your current plan and consider how each item will impact your personal and financial well-being.
- Determine Your Healthcare Needs—Age necessitates adequate healthcare, and you need to estimate the costs well before your retirement begins.
- Housing—Your retirement plan should address your long-term housing needs. Start by checking whether your home is suitable for your final years or whether you need to make other arrangements.
- Spending Estimates—Calculate how much you expect to spend each year in retirement, adjusting for inflation. The number will help you determine a specific investment amount for retiring comfortably.
- Retirement Saving—Based on your estimated spending, verify whether the amount is enough to live on for the next 25 years.
Investing and Saving for Your Retirement
According to a survey conducted recently, 49% of American citizens said that saving money for retirement was at the top of their to-do lists for 2020. Most people only think about it, though. There is often no plan beyond this, or a clear vision for how to go about it.
Saving for investments and retirement is a lot easier than most people think, however.
Set a Goal for Your Retirement Saving
Start by taking a closer look at your current financial and health conditions. Think of where you want to be in the future and then create a plan that aims at achieving these goals.
You should also take some time to visualize your ‘happily ever after.’ When you are able to imagine your retirement plan, you quickly become more focused, determined to do whatever it takes to achieve it.
Invest in Tax-Advantaged Accounts
Once you have an idea of how you hope your future will look, the next step is to set a plan into motion. Start by paying off your debt so that you are left with only your utility bills each month. Then, ensure your emergency fund is fully licensed.
Once these two crucial steps are underway, open an investment account.
Pay your 401Ks and IRAs
In most cases, companies match a particular percentage of a worker’s investment savings into these plans. If you start saving early, it will be more money for you and your employer to put towards your retirement plan; and it costs you nothing.
Save as Much as Possible
Most people find saving for retirement challenging because the expenses of the present stand in the way. There might be some potential savings hidden in plain sight, though.
You can move quicker toward retirement by cutting the cost of living now. It lowers your living costs and frees more of your income to be invested or saved.
While you need to enjoy your life to the fullest, letting your fun hijack your future is unwise. There are a few non-essential things in your budget that you can eradicate and still live comfortably. For instance, if you have a gym membership that you barely use or a cable package with hundreds of premium channels that you never watch, start by canceling these expenses.
It will help you save money that you can use towards your retirement. You can also find money by choosing an energy service provider with affordable gas rates.
Other things in your budget that you might be able to slash include the children’s tedious extracurricular activities, and useless insurance policies.
The most important step of any retirement plan is the first one—start saving.
Many people waste time thinking there’s a better moment to start planning for their golden years. While it may not be easy to think about the future, the right plan and focus will allow you to enjoy your life now and save enough for retirement.