When and How To Start Planning For Retirement?
Everyone looks forward to retirement, but not enough people plan for it sufficiently. Retirement planning is a long and complicated process, which raises the question “when and how should you start retirement planning?” Read on to learn the answers to these questions and how loans for federal employees can get your retirement planning started.
When Should You Start Planning For Retirement?
Most people, regardless of their occupation, typically retire around the age of 60. For federal employees, the average retirement age is 62*. However, that does not mean that you should start planning for retirement at age 50. Planning at 50, of course, is better than planning only at 59. However, the best age to start retirement planning is in your 20s—the earlier the better. Yes, from the moment you start working.
Why is this? Retirement is the period in your life when you don’t get a monthly salary, but you may need to spend a lot of money on your medical bills and other expenses. This is why individuals need to save sufficient money to cover their basic needs and, ideally, some luxuries too. Starting to plan for retirement early makes saving for retirement more manageable.
https://www.youtube.com/watch?v=G2RA-OPE81s
How To Start Planning For Retirement
Start planning for your retirement by following these 3 steps:
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Determine Your Expenses Post-Retirement
Think about what you will spend money on during retirement. Consider whether you will still pay your mortgage, your potential medical expenses, whether you plan on traveling, as well as your spending habits. Do not underestimate your potential expenses post-retirement as this will lead to under-preparation. You need to prepare your assets so that they can support you throughout adult age and you don’t end up outliving your retirement savings.
Another factor to consider in determining how much you need to save is inflation. Inflation will greatly affect your retirement’s longevity because it affects the value of your savings after a few decades.
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Determining Investment Goals
Knowing how much money you need during retirement should help you decide on your investment goals. Additionally, consider how much time you have to prepare. Younger employees may consider mixing high-risk investments with risk-free ones to accumulate higher savings. However, as you grow older, investments should veer toward low-risk and risk-free investments that are guaranteed to provide income when you are retired.
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Determining How Much To Contribute And Invest
Most financial planners recommend putting 10% to 15% of your annual salary toward retirement if you’re starting in your 20s. Those starting out later are recommended to save a higher amount. The higher amount you save, the higher returns you get over time, and the higher your savings becomes by retirement.
What should you do if you’re having trouble saving? Saving is a difficult task, especially when you have a mortgage and kids to raise. Try these money management tips to help you save money. You could also fund your initial investments by applying for a loan with our ACCESS LOANS™ product.
* ACCESS LOANS™ products is offered by Safra National Bank of New York (“SNBNY”). Member FDIC. Equal Housing Lender.
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