Most of us spend a large portion our adult lives working our tails off so that we can someday do all of the things that we want to do. In fact, we spend some of the best years of our lives putting our nose to the grindstone, plugging away to support our families.
Of course, there is nothing wrong with hard work. After a long and productive day, I love the feeling of accomplishment that accompanies it. Yet, when I get to be 65 years old (or even 55 for that matter), I’d rather not be clocking in for the 40+ hour weeks. Instead, I want to be doing things on my own terms and according to my own schedule. That is why my retirement plan is so important.
Having a Retirement Plan
Do you want to retire someday? Have you planned out how you intend to get there? If not, you definitely should.
According to a report by the Society of Actuaries, nearly 40% of American men and 53% of women will live to age 85. That is twenty years past the standard retirement age of 65 in the U.S. If the couple is married, there is a 72% chance that at least one of them will reach 85. For those who are healthier, the numbers increase to 50%, 62%, and 81%, respectively. The message is clear: if you don’t want to be working into your 70’s and 80’s you need to have plenty of money socked away for your golden years.
4 Tips for Retirement Planning
So, now that you know that you may live longer than you thought, how can you best prepare yourself for your retirement years? Here are a couple of quick keys to making sure you are saving enough for retirement.
- Have a Retirement Plan – If you’re planning a trip, you aren’t going to leave without knowing where you are going. You need directions, some sort of a map to guide you along the way. The same is true of retirement. In order to get where you want to go, you first need a map that shows you how to make it there. Think about where you want to be, what sort of retirement lifestyle you want to lead, and how long it is going to take you to get there. You also need to know how long you plan to stay. Once you have those goals in mind, you can start filling in the details.
- Save Early, Save Often – When it comes to retirement savings, time is your best friend. Thus, the earlier you begin to save for your retirement, the easier it will be for you to hit your retirement savings goals. Even better than that, you may be able to retire early. The “magic” of compound interest is something that can’t be understated. So, start sticking money away for retirement as early as you can. Do it every month. You’ll thank yourself later.
- Pay Yourself First – One of easiest and worst mistakes that you can make is failing to budget money for your retirement accounts each month. We get so wrapped up in having money for everything else in our lives that we forget to make retirement savings a priority. Since retirement is such an abstract concept that seems so far into the future, it is easy to put it off. However, it is this type of practice that leads to underfunded retirement accounts. So, pay yourself first each and every month. Other than a place to live, utilities, and food, your retirement needs to be the most important line item on your monthly budget. Once you’ve paid that out, you can then focus on the rest of what you need for the month.
- Make it Automatic – The simplest way to make sure that you pay yourself first is to make your retirement savings automatic. If you have a retirement plan available to you at work, be sure to take advantage of it – and make your contributions automatic. That way, you won’t even have a chance to spend the money before it hits your retirement account. You’ll never even notice that it is gone. Be sure to be saving at least 10-15% of your income. By making your retirement savings automatic, you are going to be putting yourself in a good position to have enough money to last you throughout your retirement.
Look, I don’t know anybody who wants to work into their old age simply because the have to. I certainly don’t. That is why stocking your retirement savings needs to become a top priority in your financial life. Use these quick tips to get started saving today!
When do you plan to retire? What steps are you taking to get there? Share your plans and your progress with us in the discussion below!