When Should You Begin to Plan for Retirement?
Retirement should be on the mind of every working-age adult, here are some tips to keep in mind.
Retirement is something every working-age person should be thinking about throughout their career. No matter if you just started your first "real world" job or are decades into your working life, it's important to plan for how you will save for retirement to enjoy your post-work years.
Here are some things to keep in mind when planning for this next phase of life:
Start saving sooner than later
There's no set age for when you should begin to plan for retirement, but the consensus is that the earlier you start, the better. Of course, how you save will change throughout your career. When you begin earning a steady paycheck, you can put a relatively small amount aside for retirement (like a few thousand dollars a year).
As you progress with your career, you may want to begin investing some of your savings in stocks or other accounts where you could see a return. Then, with retirement on the horizon, it's important that your savings are secure (no risky investments) and accessible when you need them. While there's no set formula for savings success, it's important to begin putting away as much as you can when you first get a job and try to increase what you put into a retirement account as your income grows.
It's never too early to begin saving for retirement.
Consider your expenses
The most important thing to consider when saving for retirement is what your post-work expenses will be. Some things will likely be different; your children will be grown and you will be saving on commuting costs. However, you may need to budget for increased expenses for things like entertainment (like vacations) and health care as you age, CNBC explained.
It's recommended to analyze your cost of living before you retire to ensure you have enough funds. Additionally, budgeting for your life during retirement is a good way to ensure your savings last as long as they should.
Ways to get started saving
Beyond saving for retirement on your own, there are some strategic decisions you can make to help you plan for the future. The financial experts at Dave Ramsey recommended getting a 401(k) match from your employer or opening up a Roth IRA as good first steps toward saving for retirement. The former means your employer will match contributions to your savings, so make sure to take advantage of this program if it's offered.
A Roth IRA, on the other hand, lets you pay taxes on the money you put into the savings account upfront. In the long-term, this ensures that when you make withdrawals after your retirement they will be tax-free.
Setting yourself up financially for retirement is always important, and Vectra Bank can help. With multiple options available, you can create the best retirement savings plan for your needs and goals.
Contact your local Vectra Bank representative today for more information on our savings plans and retirement planning.