Maybe you consider yourself young, and think “Well, I’m not going to retire for another 30 or 40 years.” Maybe you think you’ll be set “when the time comes.” The thing is, too many people hit retirement age and are shocked that they have barely enough to live on. In order to survive, some people have to work part time (as opposed to those types that want to, which a lot of people do want to as well). So really, it’s not too early to think about retiring, especially in this economy. Here are some tips for planning for retirement.
- Starting early really is beneficial. Think about it. If you put $1000 in an account when you’re 25 as opposed to when you’re 40, there’s going to be a lot more growth, and thus, a lot more money when you hit retirement.
- Be honest. Too many people just go by “basic rules” instead of being honest about what they’ll need. Simple formulas (save x amount of dollars at y amount of interest for z number of years and you’ll be fine) are not what you need when it comes to retirement. Will you still owe a mortgage? Will you be moving? What about taxes? Sit down and figure out what you may need, account for inflation if it’s a long way off, and go from there.
- Employer matching is a huge win! Many companies offer employer matching on your 401k; if you put $25 out of every paycheck, they’ll match that $25. Your investment grows not only because of interest, but because your employer is helping you out.
- Switching jobs? Make sure you take it with you. Not that you plan on quitting, but when you work out your IRA or 401k plan with your employer, make sure that a transfer due to job changing or loss is easy to do.