We hear it every day: “I should have started saving sooner”, “I wish I would have known this when I was young”, “If only I could go back in time.” As people approach retirement they often look back at different points in their lives and wish they would have done more, earlier. It’s easy to play the “shoulda’, coulda’, woulda’” game with retirement planning. And yes, it’s best to start early and contribute often, but you won’t be doomed if you are getting a late start. There are different phases to your retirement planning life and you can make successful investment decisions no matter which phase you are in. Whether you are just starting a career, hitting the stride of the middle aged, or the end of your working days is in sight, there is an attainable retirement planning strategy waiting for you.
Find your current retirement phase and see if you are in the right planning mode:
Youngins (20’s to Early 30’s):
You don’t have any incredibly large sums to invest and your retirement goals are too far off for a strict plan, but you do have something incredibly important: time. Time to slowly start stashing money away, time to evaluate your lifestyle and goals, and time to make an investment and wait for it to pay off. Time is the most valuable asset in your portfolio. Don’t waste it. If you are just kicking off your career, you might not have as many financial responsibilities as your older retirement planning peers. This allows you to take on a little more risk with your investment choices, or allows you the ability to pick an investment vehicle that may need some time to mature. How much should you be saving? That depends on what you can afford, but when it doubt use the “tipping” rule. 10% is just cutting it, 15% is average, but 20% is the goal.
Middies (30’s to 50’s):
You are knee deep into your career and waist deep into your lifetime responsibilities. At this point retirement planning should be near the top of your priority list, but you might find some other priorities there as well like paying for your kid’s college or replacing that old car. No matter how many expenses are burning up your revenue candle, don’t neglect your retirement. At this point, you should have a clear picture of where your finances stand. You have a handle on your debt and a plan to reach your goals. This structure should allow you to define some standards for your retirement savings. One of those standards should involve dampening down some of that risk from your earlier investment years. Also, make sure you are contributing the maximum possible amount to any employee retirement plan you have. At a minimum you should be contributing the employer match figures.
Oldies But Goodies (60’s to Retirees):
Your retirement is just around the corner or you may already be living the dream. Either way, this stage in the game is not the time to be taking risks. If life were lived on a football field this is where you would be taking a knee at the end of the fourth quarter to protect your lead. Your retirement planning should be focused not only on what and when to contribute, but also what and when to withdraw. Your plan should be more detailed than ever with the timing laid out for when to start applying for benefits, when to cash in on which investments, and how to set a budget for the rest of your life. Some keys to success here are to work longer and withdraw later. Don’t fall into the temptation as all your friends seem to be punching out for their last time and living off their benefits. Stick to the course and you will be successful with your retirement plan.
We have all heard the phrase, “yesterday is history, tomorrow is a mystery. Today is a gift, which is why they call it the present.” Keep that phrase in mind with your retirement planning. You can’t go back and change what you’ve done in the past and you can’t be 100% sure what the future will bring. However, you can focus on the present and make sure you are taking the right actions today for your retirement.
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