How to Set Yourself Up for Retirement No Matter Your Age
No matter how much people love or hate their jobs, many of them dream of retiring at some point in their lives. The problem is that retirement doesn’t just happen because social security is likely not enough to sustain a retiree over the long term. Instead, workers have to save for their retirement years in order to survive and thrive.
When people are just starting out in their careers, they might not think that far ahead and fail to save. Similarly, if someone hasn’t saved for retirement and is nearing standard retirement age, they might think it’s too late to retire in comfort. So, how do you set yourself up for retirement success?
Max Out Your Benefits
No matter if you’re 22 years old or 52, if your employer offers a 401(k) benefit with an employee match, contribute the maximum the government will allow or at least up to the employer match amount. The sooner you start, the longer you can benefit from compound interest to help your retirement money grow. Adjust your budget to make room for the expenditure and have the money taken directly out of your paycheck, so you aren’t tempted to use the funds.
Expenses will be ongoing, and you’ll have emergencies as well, so plan for those separately. For example, if you are a physician’s assistant and you know you need to take the PANRE exam to recertify, work that into your budget. Also, don’t forget car repairs, holidays, and home maintenance in your budget as well.
Outside of Work
While a 401(k) is a solid investment vehicle for your retirement years, you might also want to start an IRA or Roth IRA also. It might sound like a lot to carve out of your spending, but even contributing small amounts of money can snowball over time. These types of retirement accounts each have contribution limits and tax implications, so check with your financial advisor for guidance to decide which one best fits your goals.
Calculate It Out
When deciding how much you want to contribute to your retirement savings accounts, you want to have some idea of how much money you’ll need during your retirement years. By the time you reach 67 years of age, Investopedia suggests you have saved at least 10 times your salary. So, if your annual income is $50,000, that would mean you should aim to have about $500,000 by the time you retire. To hit that number, you could use a compound interest calculator and back into the number you would need to save each month to reach that goal.
Hire a Professional
Setting up retirement accounts and maximizing your benefits is a great start to saving for retirement, but you also need to choose your investments. That step is where many people falter because there are so many choices. If you need to, hire a professional to guide you. They will take into account your age and your goals to help you pick the best strategy to get you there. Remember, the investments you choose when you’re 20 will be different than the ones you choose when you’re 60. Plan to revisit your strategy on a regular basis to assess your position and make sure you’re still on track.
If you don’t want to hire a pro, that’s okay too. Many financial institutions have retirement funds you can choose that are professionally managed. All you have to do is choose the product that represents the date around when you plan to retire, and the portfolio manager does the rest.
Try not to stress about where your retirement savings stands today. Whatever your retirement position, and no matter your age, you can start building your retirement account today and be ready when the time comes.