Planning is a big part of life. We spend our childhoods planning for college, we spend college planning for a career, and we spend our careers planning for retirement.
Retirement, aside from marriage and a family, is probably the biggest thing that we spend our lives planning for. It’s quite a depressing thought, that we spend the early part of our lives planning how to save for the latest part of our lives. Alas, that is exactly what we must do if we hope to live comfortably after we pass retirement age.
Most people in their 20s don’t give their retirement much thought. It’s years away, after all, and the idea of planning for tomorrow when today is so much fun and requires so much of our time and our cash seems absurd. Retirement often feels like something to worry about far later than today, and while all you hear about is how retirement is important, pensions are important and how fast the time will go – we never listen.
It makes sense, of course, to think about the future while you’re young enough to save up for it, but the retirement plan that you pay into never seems as important as that immediate payment to the Scottsdale home remodeler that has to be made for the new investment home you’ve just built.
So, we tend to ignore the future until one day we wake up and bam – middle age has arrived. There are things that can be done though, and if you are reading this in your twenties or thirties, you needn’t panic because there is still time to think about your retirement pot. You can do the things we’ve listed below today and without much effort, so let’s get started.
Maximise your 401(K) contributions
Whichever plan you are paying into for retirement, it’s time to step up those payments to the absolute maximum that you can manage. It’s the easiest thing to get started with, as your pension contributions are drawn directly from your salary before your net income becomes available. In other words, it’s not money you will ever see. If you are lucky enough to work in a company where your employer will match your contributions, all the better. The more you save, the more your employer saves.
Start saving now
It doesn’t matter how big or small an amount you start putting away, you can get a jump on it. Even if you are really late to the game and skipped saving anything for your entire 20s, that doesn’t mean that you cannot get started right now. You need to make your money work for you, so cut out some of the unnecessary expenses that you’ve been splurging cash on and spend your money where you need it – your retirement fund. As you watch your savings and investments grow, you’ll be motivated to keep going.
Keep track of your earnings
You don’t have to obsessively watch every single dollar that you save, but checking in every six months or so on your investments, 401(K) and savings plans can keep you up to date and motivated. Use online calculators like this one to check if you are on track with your savings plans and adjust your expenditure accordingly.
Invest a little more
We mentioned investment property earlier on, and if you are looking to save up a little more money, look at the ways you can invest in other things. Stocks, shares, precious metals and another property are all places you can put your money.
Life insurance matters
Life insurance isn’t a necessity for your retirement, of course, it isn’t, but we are discussing security for your future and your family. It gives your family security should something happen to you later on, and it means that they have the cash there to be helped if you pass away earlier than planned.
Similarly, to life insurance, disability insurance gives you a safety net or a cushion should something affect your mobility. If an accident at work or at home mean that you are now unable to work, how will you contribute to your retirement fund? The short answer is that you can’t.
Getting insurance to cover more than half of your annual income can provide you that safety net that you need just in case anything bad should happen.
Rainy day savings aren’t just for cruises and holidays. It’s always recommended to have at least three to six months of savings built up in your savings account.
The reason for this is that it is a substantial amount of money saved in the event that you lose your job. It means that you can keep up with your regular payments for mortgage, rent, groceries and bills, but it also would cover your retirement payments. Without an emergency fund, you could find yourself in a precarious position. Set up regular transfers from your main account to your savings so that you don’t have to even think about the cash that you save up.
Retirement shouldn’t be something to dread. If you haven’t started your planning, it will become something that you fear and that stresses you out, and it’s not what you need.
Your retirement years should be fulfilling and secure. Ideally, you’ve been paying into a mortgage pot your whole life, which means your house is free of payments and entirely your own. If you haven’t had the privilege of building or owning your own home, you have to be creative which is why there are so many other avenues to look at when it comes to your savings.
Preparing for retirement when you are on a budget is also difficult, but this is where your employer can come into it to help you out. You don’t have to think about your retirement fund if you are proactive and on the ball early enough – so all you have to do is make sure that you set things up as early as you can.