While those in their 20s may believe that retirement is a lifetime away, planning isn’t just for older workers. The below retirement tips can help younger employees prepare for life after work, and it can help them live out the type of retirement they want.
Imagine Life Without a Job
It’s impossible to plan for retirement without having a goal in mind, and it’s never too soon to imagine life after work. Even if someone believes their goals may change, forming a basic plan today can get things started and make it easier to make changes later on.
Start Early and Save Substantially
When a person knows what they want to do after retirement, it’s time to decide how much money is necessary to accomplish these goals. With increased lifespans and the rising cost of living, most people will need more retirement funds than they think—so it’s important to save as much as possible during peak earning years. Employer-sponsored plans allow workers under 50 to save up to $18,000 each year, and many employers offer matching contributions.
Look Beyond the Office
Apart from employer-sponsored plans, there are other smart ways to save for retirement. IRAs (individual retirement accounts) allow for tax-free withdrawals under certain conditions. These help workers hedge against future tax hikes while decreasing tax worries during retirement.
Save in a Strategic Way
Don’t allow market fluctuations to knock a portfolio off course. Determining how to properly allocate savings between bonds, stocks, cash and other assets can be a great way to continually grow one’s retirement savings, and it can soften the effects of market shifts.
Leave Emotion Out of the Equation
Investors’ emotions usually follow the market’s cyclical nature. When the market is up, people tend to invest in stocks; when it’s down, many leave the market just as it’s ready for an upswing. By investing in an analytical manner, rather than an emotional one, it’s easier to increase one’s retirement savings.
Even if a young worker builds a smart investing and saving strategy, the unexpected can happen. It’s important for investors to protect themselves against risks, and a Retirement Savings advisor can evaluate a client’s personal situation before making recommendations.