Some days I think that I get so bogged down in dealing with our day-to-day finances that retirement seems too far away to even think about. I know that my husband and I won’t be old enough to retire for almost thirty years. Who has time to think about retirement planning when it’s so far away?
Whether it’s far away or not, retirement planning should be an important part of every family’s financial plan. In an effort to get you (and us) headed down the right path I’ve found a few tips to get you started:
Start now! Whatever stage of life you are at now, it is the perfect time to start thinking about your retirement. Young folks may vaguely dream about what they will do when they retire while more mature folks may be making very concrete plans. Knowing what types of things you would like to do during retirement will help you determine what your needs will be during that phase of your life.
Throw some money at it. No, I’m not talking about paying a high-priced financial planner (although you can find economical help if you need it). I mean, literally, to start throwing some money towards your retirement. Even if you can’t afford to make large contributions to your retirement savings, save something. Little amounts add up to huge amounts over a long time.
Get your boss to foot the bill. If your employer offers a 401(k) plan, make sure that you take advantage of it. Does your employer match your contributions? If he does, try to put in as much money as he will match. If you put in $5 and he puts in $5, you’ve experienced a 100% without even considering the market. How cool is that!
Don’t forget the boring, but necessary, stuff. As you get closer to retirement you will need to think about supplemental health insurance and other medical needs. If you’re close to retirement and have an idea what those costs will be, go ahead and add those into your retirement plans. If retirement is still way out on the horizon for you, though, just remember to plan for some expense. You’ll be able to firm that amount up in later years.
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{ 8 comments… read them below or add one }
Get started basically. Open a Roth IRA and contribute to your work 401K and definitely match whatever your employee gives you.
Don’t forget the finding money part. That’s I think the one part of saving most people miss. They tend to think of saving only in terms of a dollar amount they contribute to a retirement account, savings account, or other such thing. And certainly while ‘paying yourself first’ is a good rule to live by—in fact, I encourage it—so is the art of finding money that’s being wasted every day of our lives. I know I’m being pretty broad here, but it comes right down to not throwing food away, taking home leftovers when we dine out, squeezing just a couple more squirts of toothpaste out of our toothpaste tube…the list goes on.
In reality, I think there’s more money on a percentage basis here than what we can typically afford to take out of our checks each week, so if you can do both you’re getting a double benefit out of it.
Also, if you are getting close to retirement, make sure to know how much money you are going to need and get to know some of the financial products that can increase your income in retirement.
I always tell beginners to put away at least five percent of their pretax income in their employer’s 401(k) – match or not. In almost every instance, that 5% will not alter your take home pay – How cool is that?
Those that don’t have a 401(k) should throw their income tax return check at an IRA (and not pre-spend it on Christmas!).
And remember, this is investing, not savings. Markets move in unpredictable ways but they still pay much better than savings over the long-term.
Great post, according to me start saving in the young age and make proper budgeting is the perfect way to enjoy secure future.
I agree with you, everyone needs to plan the retirement finances at earlier stages only. One of the points you have mentioned here is too practical; that is to add extra in your retirement plan by considering medical and health expenses.
Great post. The younger you start, the easier it will be. If you are young, no need to throw huge chunks of money at it, just something.
I would nix the financial planner–in my personal opinion, they are a complete waste of money.
Learn what you can on your own–its fun, and free.
David, you remind me of a statement Richard Kiyosaki made once during an episode of “The Millionaire Inside You” on CNBC. He said, “I don’t turn my money over to experts, because most of them are not experts. The reason they call them brokers is because they are broker than you are.”