At every stage of your career, you should be considering—and funding—your next career: retirement. These simple strategies can help keep you on the right track over time, deliberately building an informed plan that allows you to enjoy a worry-free retirement.
If you’re in the early stages of your career, it may seem challenging to think about retirement savings given the many other likely demands on your income. But it’s important to make it a priority. Set realistic goals and know that your savings discipline today will positively affect your financial wellness in the future. Time is on your side, as your savings have the opportunity to compound over the years.
Here are some tips to help you get started:
- Live within your means. Create a spending plan detailing expenses and savings
- Create an emergency fund. Start with a small amount and consider a goal of saving at least 3–6 months of expenses
- Review your debt. Are there any balances with a considerably high interest rate, or an account you could pay off fairly easily? Take care of those first
- Make saving and investing automatic. Contributing to your 401(k) and/or other retirement savings accounts through payroll deductions or automatic transfers and direct deposits makes saving simple and easy. If your employer offers matching contributions to your retirement account, take advantage of that
- It’s important to understand the tax treatment, benefits, and the rules associated with different account types
- Pre-tax accounts (like a “traditional” 401(k), or IRA) allow you to take a tax deduction on your contributions, and you pay taxes on your distributions
- Roth accounts: you pay tax on your contributions but your qualified distributions aren’t taxed in retirement
- Health Savings Accounts (HSAs), give you a tax deduction when contributing, while providing for tax-free qualified distributions
Consider speaking with a financial advisor to learn more.
The halfway mark
If you’re closer to the mid-point in your career, it may feel like financial planning is a balancing act of competing demands. The key at this stage is to continue to prioritize and clarify your goals, keeping retirement up there near the top.
Ask yourself specific questions like:
- What kind of retirement lifestyle do I envision? Will I want to work part-time? Travel more? Spend more time with family? How will my plans impact my future income needs?
- How is my current health? How might my future health impact my plans?
- What are my current options for healthcare in retirement? Keep in mind your options may change over time
- Are my investments in line with my risk tolerance and retirement goals? Make sure to review regularly and update your plan as necessary
- Am I reducing my debt load, or increasing it? Keeping debt under control and reducing it as you move closer to retirement can help make your ultimate plans more nimble
Countdown to retirement
In the homestretch now! Count down to retirement with confidence by making sure you’ve addressed the essential pieces of a rock-solid retirement plan:
- Get a solid grasp of your income needs in retirement. Know where your money is going now and be realistic about what will change
- Start mapping out how you will access your income in retirement. Will you be receiving regular checks each month, taking distributions from your investments, or a combination of both?
- Continue to monitor your investment allocation to ensure that your investments are aligned with your goals and risk tolerance
- Gain a full understanding of your choices and the cost of medical insurance for when you ultimately retire
Retirement is more than a milestone—it can be up to a third of your lifetime (or more)! So plan today—for a comfortable tomorrow.