Retirement planning isn’t a one-and-done deal. It is a continuous process that requires adjustments to your lifestyle and finances. Start by envisioning your ideal retirement lifestyle. Do you want to continue working well into your 50s? Do you want to volunteer? Or officially take up grandparent duties?
Once you’ve understood your retirement goals, you can begin planning for the future. Here are the top retirement tips you should follow for every life stage:
Early Career (20s to Early 30s)
In your early and mid-20s, you may not have a huge amount to save or invest, but laying the groundwork is definitely possible. Here are some tips you can follow in your mid-20s and early 30s:
Build an Emergency Fund: With an emergency fund, you don’t have to rely on credit card loans. With some extra money saved up for medical emergencies or sudden job loss, you will have the opportunity to start saving for retirement.
Find a Job with Retirement Benefits: A good salary and growth opportunities aren’t the only things you should consider when finding a job. An employee-sponsored retirement plan, which often comes in the form of a 401(k), will help you grow tax-deferred money.
Mid Career (Mid-30s to 40s)
Once you’ve laid the foundation for retirement planning in your 20s, moving things forward will be easier once you hit your mid-30s. Here are some tips that can help:
Reduce Debt: Student loans, auto loans, and home loans can make it difficult to save money. Pay off personal loans as much as possible to get refinanced and get a new loan with better terms and conditions.
Think Beyond Traditional 401(k): In your mid-career, a traditional 401(k) account shouldn’t be your only retirement strategy. Opening an Individual Retirement Account (IRA) is pretty beneficial. Choose between a Traditional IRA and a Roth IRA. The contributions made to a traditional IRA are not taxed until withdrawal. In comparison, a Roth IRA allows you to save with after-tax dollars.
Automate Savings: One of the best ways to plan for retirement without added stress is to automate your savings. Connect your current and savings accounts or use a robo-advisor to save money.
Later Career (50s to Early 60s)
In your late career years, your planning should become more conservative. Follow these tips:
Avoid Frequent Withdrawals: Frequent withdrawals negate the purpose of compound savings. Set a strict withdrawal limit or invest your savings to prevent this. Use your emergency fund for medical expenses or home repairs.
Avail Professional Retirement Services: Being anxious about your retirement planning is totally understandable. Consider utilizing professional retirement planning services to create a customized plan tailored to your unique financial situation and goals.
Reliable retirement planning services, such as those offered by Creative Planning, also include strategies for tax-efficient withdrawals, allowing you to save as much money as possible.
Diversify Your Investment Portfolio: Look beyond traditional investment options, such as bonds and stocks. Consider real estate investment and Certificate of Deposit (CD) to diversify your portfolio and ensure protection in case of economic or market downturns.
