(FinancialHealth.net)- Imagine growing old and still not having enough money to survive because you didn’t start saving early on. There are a variety of factors that could put you in a situation like this. Perhaps the task of saving for retirement could be intimidating to you.
But nothing can make a person more vulnerable to absolute disaster other than feeling insecure about doing what’s necessary. Starting early in saving up for your retirement is the best thing that you can do for yourself. This will make transitioning to living life as a retiree very easy. We’re going to divide the entire process of retirement preparation into stages so that it will be easy for you to understand and follow.
So How Much Should You Be Saving for Retirement?
It’s a complex question that can’t be easily answered, but there are some general rules that you can follow. Most professionals recommend that you should save 10% to 20% of your pre-tax income for your retirement. There are also retirement calculators all over the internet that you could use. Yet, you should still consider the following factors:
- Age: The later you start saving for your retirement, the more you’ll have to contribute later on.
- Investments: Taking riskier investments can get you better returns as long as the market is doing well. Be sure to analyze the risks before taking them.
- Retirement Duration: You also need to consider how long your retirement might last. If it lasts long, then you’ll need to put more money aside.
Setting the Foundations in Your Twenties
Laying down the foundations of long-term financial prosperity should be the main priority in your twenties. Focus on stabilizing your career situation, setting up an emergency fund, and learning how to invest.
As a successful investor, you can use your earnings to begin funding your retirement. Your spending strategy should allow you to put aside a small portion of money every month. This will provide financial support for long-term projects, which could include pursuing higher studies. Remember that enhancing your personal development will get you a more prestigious position with better retirement benefits.
Prioritize getting rid of your debts quickly, either through putting money aside to pay them or getting personal loans to get a longer payment plan. Paying off your student loans will be your biggest challenge at this stage so pay them back punctually.
Build Yourself Up Even More in Your Thirties
Take what you’ve accomplished in your twenties and expand it even more. If you’ve hit your 30s and have not at least started to save for retirement, you are already in trouble. Continue to enhance your budget strategy by only spending 80% of your income and leave the rest for investments or long-term initiatives that can help you make more money. Be sure to take care of your kids’ educational finances by starting a 529 fund.
Getting It Done in Your Fourties, Fifties, and Sixties
If everything in the first two phases goes according to plan, then continue what you’re doing once you’re 40 years old. Given that you started early, you should have enough for your retirement by the age of 65. Yet, it is better to keep working as long as you can. Be sure to touch base with a professional at the Social Security Administration to learn more about the social security benefits that you’ll be getting once you retire.
It’s important to note that plans are never written in stone. You need to learn to make adjustments as your situation changes. Success always depends on your ability to observe and adapt.
~Here’s to your Financial Health!
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