If you're early in your career, middle-aged or focused on family and furthering your professional success, retirement may seem a lifetime away. But as the years go by, life speeds up - from getting married to having children or buying a home, retirement may be approaching more quickly than you think.
Financial health is vital to leading the life you crave. That's why it's essential to plan for retirement as soon as possible. It's best to begin early, but if you've put it off, there are still ways for you to prepare for the years ahead. No matter where you are in your life, start planning now. Here are a few ways you can begin saving and preparing for the future:
Evaluate your retirement goals
There's no single way to retire. Some people aim to move to a warmer climate, while others would love to spend their golden years traveling the world. Still others look forward to staying in their hometown to be close to their families.
Sit down and look toward the future - what kind of retirement do you want to have? Remember that retirement may be decades long, so these goals should take into account a range of major life changes. For example, from age 65 to 75, traveling the world may be attainable, while after that you may need to plan to move into an assisted living community.
In addition to collecting social security and utilizing state health services such as Medicare, you'll need to save to give yourself the life you want. Saving $1 million before retirement, as many financial experts advise, may seem out of reach, but even if you're starting later in life, this is still possible. It takes aggressive saving over spending, as well as a dedicated effort to give yourself the life you want, but it's doable.
So, what are your goals? Sort that out, and start saving now. Even if you don't have a crystal clear vision of how you'd like to spend your later years, try to get a general picture of your life ahead and start planning accordingly.
Prioritize saving over spending
Save extra pennies where you can. A few dollars in a savings account here and there can add up, especially over the course of decades.
There are ways to save in larger ways, too. Take, for example, housing options. You may be able to stretch your budget and pay a monthly mortgage for a five-bedroom home, but take some time to evaluate your true needs. Could you downsize your living space? Do you really need another car?
Imagine cutting your mortgage or rent expenses by $200 a month. Over 10 years, that adds up to more than $20,000 saved. Saving doesn't mean you can't still take that vacation or make discretionary purchases - there are ways to strike a balance between living a life you enjoy while still increasing your savings. Be honest with yourself about your budget, and prioritize saving over spending.
Use your company's 401(k) plan
If your company offers a retirement plan, use it, and use it aggressively. This is particularly true if your employer offers a 401(k) or 403(b) company match program. Commit to giving the maximum your company will match, and watch your money grow.
Contribute as much as you can to this retirement plan, and vow not to touch it over the years. It will make a huge difference.
Open a health savings account
Plan ahead for things beside living costs, travel and other retirement expenses. You should also prepare for increased health costs during retirement. It may be unpleasant to think about, but it's wise to assume you'll encounter some medical issues as you age.
To prepare for this eventuality, open a health savings account. An HSA offers a range of benefits - you'll be able to save in preparation for health issues, as well as contributing to a savings program that is tax deductible.
Even better, once you reach age 65, you can dip into your HSA for any expenses, including those that are not health-related. Whether you use the funds for medical conditions or not, an HSA is a smart way to save thousands each year that will come in handy in your later years.
Put yourself first
Retirement seems far away, while putting your kids through college seems far more pressing. In fact, the opposite may be true for you and your family. It's an unfortunate reality that college costs are skyrocketing, making it increasingly difficult for parents to fund their children's education. Of course, you can plan ahead for a college fund and save toward that, as well, but it still might not be enough.
If you're facing a dilemma in which you can pay for your child's college tuition if you were to dip significantly into your retirement fund, think carefully. Instead of paying out of pocket, look into loan programs with your child. With the rising cost of continued education, it's possible they'll need to take out a loan regardless. Instead of paying tens or hundreds of thousands out of your savings or taking on the loans yourself, consider cosigning a loan to help your child get a better interest rate.
Don't let perfect be the enemy of the good
Haven't saved anything by age 40? Don't beat yourself up. It's never too late to save for retirement, and no amount is too small. Not everyone is in a financial position to be able to save millions of dollars before they retire, but no matter what, it's always a good thing to save as much as you can.
You may not be in the ideal position to retire yet, but that doesn't mean you should panic or give up. If you can't save aggressively each month, start by saving whatever you can, whether that's $100 a month or $1000 a month. It all adds up over the years, so don't let perfect be the enemy of the good.
For more retirement savings tips, reach out to a Landmark Bank representative.
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