You may view retirement as the end of something – the final reward for a successful lifetime of work or the end of a busy routine. However, retirement isn’t the end, it’s a new beginning based on the decisions that you make today.
While it may be appealing to focus on the free time associated with retirement, you should also start planning for your post-career goals.
You may have a vision of how and where you will spend your retirement, but you’ll need to financially plan for your free time regardless of what you choose to do with it.
How to start planning
Deciding where to start can be challenging, particularly if there are factors that seem unknown. You may still have a long way to go before retirement, meaning your interests, lifestyle and overall persona may change. It can feel daunting to plan for the uncertain but posing the appropriate questions now will put you on a path toward a successful future. A financial advisor can help you examine the following:
- How much have I saved so far and how much will I earn before retiring?
- At what age will I start drawing from Social Security?
- Will I have other sources of retirement income to draw from and what are they?
- How much money should I put aside for medical expenses as I age?
- How much will I need to sustain my lifestyle?
- Is my retirement income supporting anyone besides myself?
Answering the questions above will help you create a plan for your future self that has achievable savings goals and will help you initiate complementary investment strategies throughout the path to retirement.
How to start saving
You may have heard the proverb, “The best time to plant a tree was 20 years ago. The second best time is now.” The same applies to saving for your retirement. If you start saving today, you will have the benefit of compound interest to help your money grow.
An easy way to start saving is to take advantage of your 401(k) plan. Even if your company does not match your monthly contribution, it’s important to invest a small amount from each paycheck, set the money aside and allow it to earn interest overtime. If your organization does not offer a 401(k) or if you are self-employed, you will want to consider contributing to an individual retirement account (IRA).
You can start with as little as 1% and increase your contributions over time, providing you with peace of mind that you are preparing for your future.
Prepare today
Your retirement goals are unique – your plan should be too. Understanding how to save and invest now will help you create the retirement that you’ve always envisioned for yourself.