Does retirement feel like it's far away in a hazy, distant future? Though it might seem like you still have a lifetime left before your golden years, now is the time to start retirement planning.
In fact, the earlier you start planning for retirement, the better. At each stage of life, your financial situation, responsibilities, and financial goals will likely change. But no matter which point you're at currently, looking at your retirement planning through a long-term perspective is key.
To keep you on the right track, our retirement investment advisors share their tips and financial strategies for retirement planning at any stage of life.
The 20s: Develop Your Comprehensive Financial Plan
You've graduated, gotten your first job (and maybe moved on to your second), and experienced many of the exciting life changes that characterize your 20s. With all that you've got going on, it's easy to overlook retirement — but now is the best time to start planning for your future. Remember, the sooner you start saving, the better off you'll be in a few decades, thanks to the magic of compounding interest.
Meet with a trusted financial or retirement planning advisor and identify your financial goals, set a budget, and create a plan to pay off any student loan debt you may have accumulated. Then you'll have a clearer picture of how much you can save through an employer-sponsored plan, such as a 401(k), or an individual retirement account, such as an IRA or Roth IRA.
The 30s: Putting your Financial Strategies to Work
As you enter your 30s, you'll be able to look back and appreciate the milestones you've achieved. Your career is likely moving ahead, and you may have started a family or purchased a home. Along with your new resources comes new financial responsibilities, but it's still important to set retirement savings aside and not get derailed by expenses such as a mortgage payment.
Now is the perfect time to meet with a financial advisor to discuss your financial planning options. You may need to consider factors such as setting up a 529 educational saving account for your dependents or purchasing life insurance, as well as retirement planning. Staying on top of these issues in your 30s can help prevent the need to dip into your savings later.
The 40s and 50s: Family Wealth Management Focus
Retirement may still be a decade or two away, but it's definitely feeling closer than it used to. Your 40s and 50s will bring more control over your finances, as you now have a deeper understanding of your financial situation and expenses. Use this knowledge and experience to refocus on your retirement income needs.
Meet with your retirement planning advisor to revisit your anticipated budget, taking into account both the loss of your current paycheck and potentially high costs such as health care or long-term care. If you're worried that you won't meet your savings goals, rethink your contributions, adjust your expectations, or consider pushing out your anticipated retirement age to compensate.
Once you turn 50, you can start making larger annual contributions to your 401(k) and IRA/Roth accounts. Known as "catch-up contributions", you can sock up to $5,500 more into your 401(k).
The 60s: Wealth Strategies Continue
Just because retirement is just around the corner doesn't mean you can stop saving and planning. Rather, it's especially important to stay on top of your plan, as life expectancies keep increasing. You may start collecting Social Security disbursements in your 60s, but be sure you make the most of this benefit by claiming at the optimal time.
Work with your trusted investment advisor to determine when you should start claiming Social Security and taking disbursements from your retirement accounts. And remember, retirement is a life-long journey! Saving early and often is the best way to meet your retirement goals.