You’ve heard the old adage … there are only two guarantees in life: death and taxes. Well, there is another one, aging. We’re all going to get older whether we like it or not. You can’t stop Father Time from knocking at your doorstep. With that in mind, most of us don’t want to work during our “golden years” when we could be enjoying time with our spouse, family, playing golf, fishing – whatever! Retirement is a goal that no matter who you are or where you’re from, you want to do it someday.
But in order to have a comfortable retirement “then,” you need to start planning “now.” Here’s a simple plan to help your preparation:
Be realistic. Many “online” retirement calculators ask for the amount you believe you’ll need to live comfortably at retirement. Now, for those in their 20s, 30s or even 40s, this could be hard to speculate. After all, outside a 5-10 year time horizon, who knows what the future will have in store – lifestyle, health needs, taxes, investment returns – it’s pretty much up in the air. So we believe when you start planning, plan at your current income and lifestyle situation, and then recalculate as your circumstances change. The important thing is to START your planning and put away what you can afford, today.
Get into the groove. As we mentioned above, your first step is to START saving. Get into the habit of putting money away, or even better, having it automatically deducted from your paycheck into your 401(k) or 403(b) plan. This way, the sooner you start saving, the sooner your money can start working for you.
We suggest putting a manageable amount, like 5% of your income, into a tax-deferred retirement plan. If 5% is too much, then contribute whatever you can afford. Does your company match retirement contributions? Yes…even better. In that case, to get the most out of employer match plans, try and save enough to qualify for the entire match.
Flying on autopilot. Out of sight, out of mind, right? We think so, especially when we’re talking employer sponsored retirement plans. One of the easiest ways to stick with a savings plan is to make it automatic – have your job deduct the money directly from your paycheck before you spend it, and more importantly, before you pay taxes on it. Having automatic deductions taken from your paycheck ensures that retirement saving is consistent.
If you don’t have a workplace savings plan, setting one up with a bank, brokerage firm, or directly with a fund is pretty easy. Typically, it involves a phone call and a voided check – so the money can move from your checking account directly into your “retirement fund” every month effortlessly. And some plans can start with as little as $100 a month. So check around!