5 Easy Tips to Prepare for Retirement Early
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When you hear the word “retirement”, what’s the first thing that comes to mind? Many 30-something adults might imagine gray hair and rocking chairs. For them, the idea of retirement is such a faraway concept. Surely, that kind of concern should only come out in their 60s or 70s, right?
However, let’s face the facts: you aren’t the same 20-year-old who spent their time hunting for jobs or enjoying the nightlife. By the time you reach your thirties, you’re probably working hard in a chosen field and trying to settle down. The partying days have disappeared into long nights of rest. Perhaps you’re planning on getting married or having kids now. In other words, this stage of your life is more serious and more grounded.
That’s why it’s important to know how to prepare for retirement immediately. Yes, you may still have twenty or thirty years of work and dedication left. However, there are many reasons why you should start as early as now. Here’s what you need to know about retirement and why you should start planning.
Why should I start planning for retirement this early?
Contrary to popular belief, retirement planning isn’t as easy as it sounds. You don’t automatically get to say goodbye and rest in the lounge in your later years. People learn how to prepare for retirement because it still costs money to live out the rest of their days. Here are some reasons for you to start planning for retirement today.
You can avoid stress and its effects.
Imagine what your life would be like when you finally retire. Your bosses and coworkers give you a watch and bid you farewell. Suddenly, your calendar of eight-hour shifts opens up to months of free time. Whatever you plan to do in the future is up to you. You might focus on relaxing and being with your family in your remaining years. You may also think about running a side hustle or managing a business of your own. In any case, these things cost money.
If you don’t prepare for retirement, the lack of funds and resources can hurt you badly. It’s easy to feel stressed when you realize that you don’t have enough budget to cover the lifestyle you want. Whether it’s to live on the shoreside or travel the world, you’d feel sad if you couldn’t afford it. What’s worse is that financial stress can cause problems in your later years, from heart problems to depression.
By learning how to prepare for retirement this early, you can easily cut away all that nervousness. Preparing your money can help you afford the kind of lifestyle you want. You can even modify your retirement plans to fit whatever future you plan on, whether that’s resting at home or traveling the country.
You can’t always rely on social security.
At first glance, people might think that Social Security is enough to pay for their retirement. They might scoff at the idea of a 401(K) or a Roth IRA because they have social security deposits. However, according to the Social Security Administration, its payments only cover about 40% of the average wage earner’s income in retirement. That’s well under the recommended percentage of 70%, especially if you want to live comfortably after you retire.
With a proper retirement plan, you can get that 70% and maybe more for your coverage. The key is to know how to prepare for retirement right now. The sooner you begin, the more funds you can build for your post-career lifestyle.
You can keep the pressure off your dependents.
You might know of several retirees who depend on their loved ones for financial support. They lean on their children or their spouses to pay for the retirement lifestyle they want. However, this kind of attitude puts a lot of pressure on the families involved. Can you imagine having to cover your mortgages and taxes while also paying for someone else’s seaside home?
By preparing for retirement now, you can save a lot of trouble and financial stress for yourself and your family. While building funds for your retirement, you can also enjoy speaking to family and letting them live their own lives. It’s a win-win scenario for everyone involved!
You can’t predict what tomorrow brings.
Earlier, it was mentioned that many people think of retirement as an elderly issue. For them, it’s only going to happen by the time they turn 65 or older. However, there is no predicting the future. Many people have either lost or quit their jobs during the pandemic alone. Some even had to retire early to focus on being with their loved ones. In short, you can’t assume that your retirement will happen in your later years. It could happen as early as next year or within the next decade.
In any case, it’s always better to be safe than sorry. By learning how to prepare for retirement now, you can start to secure a safety net for yourself. If you did have to retire this time next year, wouldn’t you prefer to have some cash at hand? Remember, it’s never too early to prepare for retirement. The sooner you start, the happier your life will become.
How can I start preparing for retirement now?
Now that you know why retirement planning matters, it’s time to learn how to prepare for retirement. Here are five easy tips you can follow to get started now.
1. Start saving immediately.
Whether you’re just a fresh graduate or you’re approaching your 40s, the time to start saving is NOW. First, you need to monitor how your finances look. See how much you spend every week or every month. Compare that to how much you earn regularly. Once you make a list or an account of each, make sure to review them thoroughly.
When you see something, either an item or a habit, that doesn’t fit your plans, consider removing it entirely. If not, be sure to buy it on occasion. For example, a Gucci suit might be a nice purchase but it doesn’t have to be a monthly buy. You can always stick to a couple of suits and wear them to business meetings for the next ten years. Not only do you save cash, but you also save on wardrobe space and budget.
By the time you start cutting out or lowering expenses, you’ll find some extra cash in your pocket. Take the initiative by diverting that cash to your retirement plan. Whether you have an IRA or a company-sponsored plan, start paying your dues there. By the time you get your retirement budget, you’ll be glad that you prepared in advance.
2. Clear out any existing debts.
Aside from building on your savings, make sure that you start paying off those debts now. The sooner you clear your existing loans, the sooner you can save more money for retirement. By paying it off quickly, you won’t be subject to high-interest rates or additional penalties. If you can’t pay it right now, concentrate on having a plan instead. See how you can start saving money to clear your debts and still have some amount for your retirement. The last thing you want is to be in your 60s and still working to cover your student debts.
3. Visualize your future and what you want to achieve.
The best way to stay motivated is to know what life you are preparing for. To understand how to prepare for retirement, you need to imagine the why. What kind of life do you want to live when you finally leave the working world? Do you plan on sailing the seven seas or living in a nice upstate area?
Once you know what future you want, start looking at the cost of your potential life. How much would that nice home cost you? What budget do you have for traveling to X amount of states or countries?
Once you work out an estimate of your retirement life, you can start to work towards that goal.
You don’t even need to start shelling out hundreds of dollars this early. Start small and focus on saving a dollar or two dollars every week. Then, as time goes on, build on that habit and add more dollars to your minimum. Sooner or later, you’ll find that you’re saving up to $50 or $75 a month without breaking a sweat!
4. Check your workplace contributions for a retirement plan.
As mentioned earlier, Social Security should not be the only means of supporting your retirement. There are other ways that you can start funding a retirement plan. Before you log out of work today, check with your employer and see what kinds of retirement plans they offer. You could get a 401(K), a 403(b), a Thrift Savings Plan (TSP), and other options like that.
With a company-sponsored plan, you can learn how to prepare for retirement in your workplace. Plus, the company can automatically deposit a fraction of your salary into this plan. This means that you can avoid spending unnecessarily or wasting time looking for more cash.
5. Explore other retirement options, like IRAs.
Let’s say that your company doesn’t have a sponsored retirement plan or that you don’t feel it’s right for you. What do you do now? Thankfully, you can explore individual retirement account (IRA) options. You can choose either a traditional IRA, which has tax-deferred income, or a Roth IRA, which has a tax-free income. In both options, you can withdraw them when necessary and enjoy tax deduction benefits. Either way, it’s further proof that you can learn how to prepare for retirement in your way.
In summary
Planning for retirement can start as early as now. By learning how to prepare for retirement this soon, you can start building the funds for your ideal future. Whether you plan on traveling the world or relaxing at home, a retirement fund can make that all happen.
By starting immediately, you can avoid a lot of stress for yourself and your loved ones. You can start now by examining your financial planning and saving what you can for your retirement fund. You can make it easier by clearing out your existing debts and checking for a workplace contribution plan. Alternatively, you can always turn to an IRA for your retirement plan. The sooner you start saving, the happier your future will be.
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- Ali, M. (2022, May 11). You’re Not Getting Younger －Here’s How To Plan For Retirement In Your 30s. YouTube.
- Appleby, D. (2022, December 21). Top 4 Reasons to Save for Retirement Now. Investopedia.
- Fonville, M. (2020, February 2). 9 Reasons Why Retirement Planning is Important. Covenant Wealth.
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