When Is the Right Time to Think About Retirement?

Saturday, December 30, 2017, 6:00 AM | Leave Comment

Retirement is a quintessential part of what the modern view of middle class life looks like.

The ability to retire after a life of working hard and putting in your time is a fundamental aspect of the American dream. And yet, more and more people today believe that retirement is an idea that is out of reach for them, and have no idea how they are going to be able to retire on their current income.

While there are large economic problems that go into this current national mindset, the reality is that we can all do more to put ourselves in a better financial situation to reach retirement, and it all flows back to one major question – when is it the right time to think about retirement?

Spoiler alert: it’s now. (And it’s never too late.)

Here are some things we all can do a better job at, so that the goal of retirement can become a more feasible thing in the minds…

  • Have a plan

    Most people have an idea of things that they should be doing to get to retirement, such as saving money, but it is difficult for people to start doing something when they don’t have a clear idea about the cause and effect relationship that their actions have on their goals.

    Essentially, you need a retirement plan before you can truly know what to do to prepare for it. This means thinking about what you want your retirement to look like, and considering how much money you need to have in either savings or in reliable investments to make that lifestyle a possibility.

  • Save, save, save

    The nice thing about having a plan is that you know the exact number that you are trying to get to. This is a tangible objective that you can work towards, rather than an abstract idea of what society thinks retirement looks like. Once you know what that number is, though, you need to make the most important contribution to your retirement plan: you need to save.

    Saving money is something that most people can always get into a better habit of. Even before you are consciously thinking about saving for retirement, you should always try to put some of your earnings away for good practice. This doesn’t just help build to retirement, but also puts you in a better situation to deal with unexpected expenses.

    When it comes to saving for retirement, though, the good news is that your plan gives you an exact idea of how much money you should be putting away each month, although you ideally won’t need to save up the entire amount, for one simple reason…

  • Invest!

    The idea that you should reach your retirement goals by savings, alone, is a silly one to have in this economic climate, where interest rates for savings accounts are barely above 0.

    The reality is that, if you just leave your money in a savings account, then you are losing money, because inflation (at around the 3% target of the Federal Reserve) is going to make that money hold less and less value each and every year.

    So, how do you get around the obstacle of macroeconomics? Well, you don’t let your money just sit around, gathering dust. Instead, you invest.

    Nowadays, there are tools that you can use to help you start investing in the market with pretty much any amount possible, and robo advisors have made it easy to diversify your portfolio in a way that makes sense.

    While you should always keep some money set aside for a rainy day, most of your savings should be actively trying to make you more money.

  • Get a financial advisor

    For many people, it is a huge struggle to try to wrap their head around financial matters. That’s okay. That doesn’t mean that you have to be put at a disadvantage, when it comes to preparing for retirement.

    Instead, it’s helpful to get a financial advisor to help you set clear goals for yourself and make realistic expectations about what you can do, at the moment, to prepare for your retirement.

    Essentially, a financial advisor will both make the calculations for you, and give you advice on how to mold your lifestyle around your goals.

    Financial advisors can also give you advice on programs and procedures that are in place to help people retire in their old age, such as how their homes can be accessed for equity through a reverse mortgage, or what types of assistance they can expect to see from social security.

This article is written by Alek Sabin.

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