When is the best time to start planning for retirement? Ideally, the day you start working, but let’s be realistic here; most of us aren’t even going to think about retirement until at least our late 20s/early 30s, and not even then for some folks. If you’re forty or older, it’s time to seriously start considering how you’re going to retire. How do you get serious about it? Ask yourself this: how much longer do you want to work?
How Much Longer Do You Want to Work?
Imagine being 75 years old and still working at your current job. Does that sound like something you’re interested in doing? Most people can’t imagine working well into their seventies and eighties, but the unfortunate fact is that it does happen. There are plenty of “retirees” who didn’t quite save enough and were forced to find part-time or even full-time positions to supplement their income.
Let’s say you turned forty this year. Ideally, you’ll want to work another twenty or twenty-five years, and retire right around 60/65. This is the average retirement age for most folks, but without the right savings and financial planning, you’ll be lucky to meet this deadline. You don’t want to spend your wonder years working all the time!
Once you’ve decided how much longer you really want to work, you can begin to crunch the numbers. If you’ve got twenty years left before retirement, you can begin saving immediately and still be able to reach your savings goals. The earlier you begin saving, the better off you’ll be once you retire.
Are You Receiving Professional Advice?
Financial planning such as this rarely goes off without a hitch, which is why it can be incredibly helpful to have some professional advice in your arsenal. If you’re struggling to get your finances together and come up with a retirement plan, you might want to enlist the services of a financial advisor or planner to get you on track.
If you’re in the New Jersey/New York area, you can find the best financial advisor in New Jersey on Carefulcents.com. The site is loaded with excellent finance advice as well, so you’ll be able to find more information on planning for retirement and other areas as well.
How Much do you Have Saved Already?
If you’re forty-five and you’ve got $5,000 saved for retirement, you might find yourself in a bit of a sticky situation as the years go by. According to this article at CNBC, by age 40, if you’re bringing in $50,000/year, you should have at least saved up $150,000. That’s the minimum, of course, going off of an average household income of $50k.
The more you save the better, and if you’re well under that $150,000 mark at age 40, it’s time to seriously evaluate your financial decision making and put saving for retirement at the top of your list. Even if you’ll receive a pension when you retire, you’ll need to account for additional expenses and the possibility you could lose your job just before you retire. Don’t think it could happen? This HuffPost article details just how companies sneakily rid themselves of older employees to avoid pensions and retirement payments.
What About Inflation?
If you’re forty or older, or even as young as thirty, you’ll know that your dollar doesn’t go as far as it used to. Inflation is a very real occurrence, and one that can have a serious effect on planning for retirement. Inflation causes costs to rise and the value of the dollar to go down; so that $450,000 you have saved for retirement could be worth even less twenty years from now.
In accounting for inflation, you’ll always want to save more than you think you need. As stated already several times, the more you save, the better. Even if you only save an extra $20,000, it’s still better than nothing. Don’t let inflation make your retirement plans outdated; plan for extra expenses and inflation by saving as much as you can every year. Eliminate costly, unnecessary expenses and instead invest in your retirement.
Social Security Will Help, Right?
Social security payments are valued resources for millions of retirees all over the country, but the unfortunate fact is that Social Security is set to run out of money in the future. In fact, by 2035, benefits are set to be significantly reduced if Congress doesn’t come up with a plan to save this much-needed system.
The bottom line is, you don’t want to depend on the government to fund your retirement; especially with the state the Social Security Administration is in today. Indecisive politics and irresponsible spending don’t have to affect your golden years as long as you’re saving the right amount every year.
It’s best to trust in your own money when saving for retirement. While you can still include potential social security benefits in your retirement plan, it’s better to depend on your own savings to get you through those post-working years. Save as much as you can!
Essentially, the sooner you get serious about your retirement, the better. Retirement should be fun and relaxing, not stressful and rife with financial woes. Save early, save often, and always recruit professional advice, so you know where to invest your money for optimal growth.