It’s never too early or too late to put money aside for a nest egg, even if your employer offers a pension. No matter what your age, start creating a retirement plan now so that you can have the retirement of your dreams that you have worked so hard for.
Start by figuring out exactly how much you’ll need to save, invest, and set aside to live the retirement life you want. Ask yourself questions like: will you travel? Do part-time work? Relocate and move to a smaller—or bigger—home?
While you’ll receive Social Security benefits, they shouldn’t be your only source of retirement income. Expenses change as you age, and medical expenses should also be considered, especially since your employer typically stops contributing once you retire.
Talking to a financial advisor can often help you set up a specific long- or short-term plan, but there are also things that you can do on your own to plan for retirement, no matter what your age.
First and foremost, max out employee matching for your 401(K). For example, if your employer matches contributions up to 6%, contribute 6% of your own earnings with each paycheck. Not only will it be taken out of your paycheck (making it easier to save), but it’s essentially free money.
Then do some of the following, depending on your age group:
The twenties
In your twenties, focus on long-term investments:
- Join your employer’s 401(K) and up your contribution to 10%.
- Create a Roth Individual Retirement Account (IRA) through companies like Ameritrade or Scottrade. These are all low-risk investments that can pay off in the long run—as long as you continue to make steady contributions and don’t withdraw early. Plus, not only will you be saving, you may also get a larger annual tax refund.
- Build good credit by using a couple credit cards, keeping the balances low, and paying them off each month. This will keep your interest rates later in life—for cars and mortgages, according to Time—lower, allowing you to have more money to save and invest.
The Thirties
Find ways to grow your options:
- Increase your monthly contributions into investments. Now that your career is in full swing, you know your budget, and you know how much you can set aside each month. Take that money and contribute to 401(K)s, IRAs, stocks, and CDs.
- Consider your real estate options. While housing is rarely an investment anymore, even if you plan to own a house long term, there are some monetary benefits, such as tax-deductible mortgage interest and first-time home-buyer tax credits.
Forties
Invest, invest, and invest:
- Start an IRA through a mutual fund company if you haven’t already, and max out yearly payments (up to $5,000).
- As your salary increases, also increase your contributions. Financial planners often recommend contributing 15-20% of your take-home pay, especially if you’re just starting to plan your retirement.
The fifties
Spend wisely, and save rather than speculate:
- You may be making the highest salary you ever have, but spend as if you’re making the same as you were in your forties. Use that extra cash flow to invest.
- Rather than make high-risk investments, make safe, low-risk decisions with your money.
The Sixties
You’re ready to retire, but when?
- Give yourself a retirement deadline. Sit down, make a plan, get rid of any debt, and purchase long-term care insurance in case you need to move into a nursing community or attend rehab treatment.
- Explore short-term investment options, and focus on opportunities like an immediate annuity, which is insurance that provides income based on a lump investment. As MSN points out, this insurance can often help cover everyday expenses as well as unexpected ones, like a broken-down car.
- Decide when to start taking Social Security benefits. The longer you wait, the bigger the check. Many financial planners advise waiting until at least age 65.
No matter what your age, review your retirement plan regularly to make sure you’re contributing enough to meet your goals to live the retirement life you’ve always dreamed of.
Planning for retirement is a crucial aspect of financial management, regardless of age. This comprehensive guide outlines actionable steps individuals can take at every stage of life to secure their financial future and achieve their retirement goals.
From maximizing employer-matching contributions in your twenties to exploring short-term investment options in your sixties, this guide provides practical advice tailored to different life stages.
By taking proactive measures such as contributing to retirement accounts, building good credit, and investing wisely, individuals can lay the foundation for a comfortable and fulfilling retirement.
The importance of seeking professional guidance from financial advisors is also emphasized, as they can offer personalized strategies and insights to optimize retirement planning efforts.
Additionally, considerations such as healthcare expenses, real estate investments, and Social Security benefits are highlighted to ensure a comprehensive approach to retirement preparedness.
Ultimately, this guide underscores the significance of regular review and adjustment of retirement plans to adapt to changing circumstances and ensure alignment with evolving financial goals.
By following these steps and remaining proactive in managing finances, individuals can work towards realizing their vision of a secure and prosperous retirement.
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