As we look at a timeline of someone’s life, allow us to paint in broad strokes in regards to our observations.
Age: 20s and 30s
We generally find that in one’s 20s and 30s, individuals are often not thinking much about retirement. They are focused on finding their footing, paying down debt, making ends meet.
New Year’s Resolution: Dream up Your Retirement
At this point, you are a ways out from retiring. You are just beginning your career and retirement is probably the last thing on your mind. However, the irony is that putting money aside now puts you at a distinct advantage over any other age, even though you may not want to think about it. Why? Because you have compounding interest on your side. You have the ability to set aside a smaller amount and watch the power of compounding interest do the rest.
That said, now is the time to start thinking about your dream retirement and what it might take to get there. You can check out retirement planning calculators on our website to see what effect compounding interest has, to see how much you might need to start setting aside now. Given that most employers offer some sort of retirement account contribution-matching program, you should be sure you aren’t leaving any “free money” on the table.
Age: 30s and 40s
Once people reach their late 30s and 40s, they shift their focus to a more accumulation phase where they begin thinking about what they’ll need to retire. However, even in this phase, retirement isn’t in clear focus. They often don’t know where they want to live in retirement, what they want to do, how much to save, they are simply (hopefully) accumulating without a whole lot of direction.
New Year’s Resolution: Develop a Written Plan
We encourage this even for younger adults, but certainly by your late 30s and 40s you should have a detailed, written financial plan in place which will serve as a guideline for how you live your day-to-day life. It will direct your financial decision making and budgeting in order to put you on the path towards your dream retirement.
Katherine Paterson says a dream without a plan is just a wish. If you’ve been dreaming about what retirement might one day look like, now is the time to put a written plan into place. Turn that wish into an attainable goal.
Age: 50s and 60s
Once individuals reach their 50s — believe it or not — retirement could be just around the corner. This is when we see people start to get a lot more serious about their retirement planning. They have hobbies, interests and a vision for how they want to live their retirement.
New Year’s Resolution: Meet with a Financial Planner
It is never too early to meet with a financial planner. But it is imperative that you do so when you are reaching your retirement years. There are distribution strategies you can implement to save money on taxes. There are investment strategies you can implement to ensure you outlive your assets. Plus, a good financial advisor and planner can tell you when you are ready to retire. These are tools you will need in order to be confident that you are set up for success in retirement.
This New Year’s, we challenge you to take retirement planning seriously regardless of what stage you are in life, as you consider what retirement might look like for you.