Managing one’s own retirement can be a daunting prospect. It is even more difficult for those who are new to the workforce or are still decades away from saving enough for their golden years. Luckily, managing one’s retirement is not as hard as it sounds if you follow these five easy steps.
Find the right plan that is right for you
In order to save money for your retirement, you need to have a way to put those funds aside. Before choosing a plan that fits your needs and budget, do some research on the various plans available. Many companies offer retirement plans; however, if you work for yourself, you may find other plans better for your needs. Those who plan to travel a lot or live in a state with high taxes may find it more beneficial to purchase a variable annuity. Once you have chosen the right plan for you, make sure that your employer offers any company match, and start contributing as soon as possible.
Start early but not too early
There are many benefits to starting your retirement savings as early as possible; however, if you start too early (when you are still in school or unemployed), then you cannot take advantage of compound interest. Instead of choosing an arbitrary age at which to start saving, use the rule of 72 instead. Divide 72 by the percentage of your income that you would like to save per year. If you want to save 5% of your income, then start saving at age 36-72.
Be mindful of where and how you spend
In order to make sure that your savings last throughout retirement, it is important to be mindful of where and how you spend. Try not to live above your means, purchase items that lose value over time (like cars), or spend money you don’t have. You should also fully utilize tax-advantaged accounts.
Investing can seem like a daunting task for those new to the workforce; however, there are many online calculators and tools to make it easy. You should also consider consulting with an investment professional if you find yourself confused by all of the options and jargon. There are different types of investments that cater to different personalities and risk tolerances, so make sure to do your research before making any investments.
Stay the course and diversify
Whatever plan you choose, don’t let it change as your life circumstances change. If you start saving for retirement in your early 20s, then continue putting aside that same percentage of income; no matter how much you make, your savings should last. However, if you start saving for retirement in your mid-30s and suddenly lose your job and income, do not panic and withdraw money from those accounts (or take on more risky investments). Instead, find a way to continue saving as much as possible. Your golden years will be better if you manage your retirement well. Even with Trilogy Care available, you’d still feel more prepared if you start saving early.
Managing your own retirement can be a daunting task, but it doesn’t have to be. Follow these five simple steps, and you will be well on your way to a financially secure future.
This is a collaborative post.