“The best time to start planning your retirement is probably the day you get your first paycheck.” Jeff Kennedy
If you’re like most people, planning retirement when you believe you have 15 or 20 years of work left feels a bit premature. However, earlier is almost always better when planning for the end of your work life.
Maybe you’re busy trying to further your career and keep putting off designing a retirement income blueprint. Or, you’re raising a family and feel like you are too busy to plan school lunches, much less choose investments. Retirement can seem so removed from your present reality that it hardly feels real.
Many financial educators say starting early is a path to a more prosperous, less stressful retirement. If you have a few years before you hit retirement age, you have a definite advantage over older, wealthier folks. Taking advantage of a longer time horizon to anticipate your financial future is never a bad idea.
I encourage my clients, even those in their early to mid-thirties, to prioritize saving for a time when they no longer draw a paycheck. At any age, it makes sense to:
- Do an annual review to ensure your current investment matrix aligns with your long-term money goals, especially during market uncertainty.
- Put all “windfall money,” bonuses, tax refunds, and rebates directly into your retirement accounts.
- Contribute to a qualified retirement plan sponsored by your employer, especially if your employer matches contributions.
- Consult a qualified retirement income planner to do the math and determine if you are saving enough.
- Keep your debt levels low.
- Become a mindful spender instead of being transaction-focused. Write down your expenditures, even small ones. That way, you’ll more easily see how those lattes and movie tickets add up and perhaps think a little harder before you spend.
- Shift to a long-term mindset to better understand how your spending choices affect your wealth.
- Consider side hustles, gig work, or a second job if you worry about not saving enough.
- Open and fund an IRA. You can have an IRA and also participate in an employer’s qualified retirement plan.
- Ensure you have enough non-market-correlated assets in your portfolio. These might include life insurance or annuities.
- Start learning about Social Security and Medicare now, rather than waiting a few months before you need to make decisions. Medicare can be tricky to master, and taking Social Security at the wrong age will have lifetime implications.
Summing it up:
If you are a younger pre-retiree, it might be challenging for you to take retirement planning seriously. Still, if you can shift to a long-term mindset, starting earlier can mean the difference between having a more enjoyable, less stressful retirement and one that is less than ideal. Partnering with a trusted retirement income planner is a perfect way to get started!