Five Steps to Prepare for Retirement Today

Mar 22

Planning your financial future can feel difficult, especially when you are in the middle of worrying about the present, but saving doesn’t have to be a burden. In fact, with the right approach, setting aside money for retirement can help you learn valuable budgeting techniques that can pay off in the short term as well. Everyone wants to make sure they are set for the future, and some want to feel secure in the knowledge that their family is too, that’s why they will speak with an estate planning attorney and others like them to get everything in order. For now, it is important to focus on the retirement section of your life.

Even if retirement feels a long way off, read on for five ways to reignite your financial portfolio and optimize your financial wellbeing for the next ten, twenty, or fifty years.

Start now

You will always have a hundred excuses to delay the process of getting organized, but the sooner you start, the bigger your nest egg will be. When it comes to growing your retirement fund, the biggest advantage comes from compounding interest. If you put aside even $10 from each paycheck into savings, that account will grow at a considerably faster rate (than if you start saving in a decade). This means that you would have the money to afford the lifestyle that you want in your golden years, be it living in an active adult community near Easton or travelling the world on a cruise.

Make it automatic

Deposit money automatically to make the entire experience hassle-free. Arrange with your employer to deposit a percentage of each paycheck directly into a 401(k) each month. Not only does this offer certain tax benefits, it means the money never ends up in your checking account. Auto-transfers are simple and convenient and help you budget your savings effectively.

Consider an IRA

IRAs offer you a great deal of control and flexibility. With a 401(k) plan, the employer chooses the investments and sets the rule. Though the rules tend to vary from plan to plan, with an IRA, you are in charge so you have greater financial freedom over your own assets. There are also considerable tax advantages to putting your money in an IRA. Think about it before letting your earnings languish in a forgotten 401(k) account for decades. However, you may want to look in other places too, such as precious metals. If this sounds like something you would be interested in, you could speak with an advisor who will be able to assist you and answer all your questions, e.g. “What would my financial outlook be if I were to make a change to my savings, such as how to convert my IRA to gold without penalty?”

Diversify your portfolio

It’s smart to manage your risk, especially if you have a history of poor financial choices, but in your youth you can take on a bit of risk (which could include day trading stocks). As you approach retirement age, you will want to back off on high risk / high reward options in favor of low yield guarantees. Adjust your savings account to reflect your current phase and stage of life to maximize earnings in the long term.

Re-evaluate often

Don’t ignore your retirement account. Whether you still have funds tucked away in a 401(K) through an old employer, or you have recently made the switch to a more flexible IRA, keep an eye on your savings and be actively involved.

Retirement might feel like it is eons away, but the truth is, it will be here sooner than you think. When that day does finally arrive, you deserve to have your finances in order. Studies show that people today typically live twenty years into retirement – so make sure you have the funds to live the life you want.