How to start saving for retirement
If you’re in your thirties or forties, your life is likely wrought with financial obligations. Many people in this age group have the costs of weddings, mortgages, and young children to budget for, and it often overshadows that looming, far-off, ultimate goal: retirement.
Not to worry. You can always get yourself on the path to retirement readiness by asking yourself a few key questions to get started.
How much do I need to retire?
Experts cite that individuals need anywhere from 50 to 80 percent of pre-retirement income per year to live off during their golden years1. The actual number is up to you to decide based on your lifestyle and your financial obligations.
When it comes to living expenses, the plus side is that the priorities that exist in your thirties or forties such as a mortgage and childcare costs should no longer be line items once you hit retirement.
To get started planning your retirement, it’s absolutely essential that you have an idea of how much you will need. There are a number of retirement savings calculators out there that can help you do the math.
How do I start without delaying other priorities?
Here’s the tricky part. If you have mortgage payments, daycare costs, education savings costs and/or any debt outside of your mortgage, you might not feel like you have enough to sock away for retirement. This doesn’t have to be the case. There are a few measures you can take to ensure you get started – even if it’s slowly.
- Take advantage of your workplace retirement plan. If there’s a matching component, be sure to choose the maximum level of contribution to get the most ‘free money’ out of your employer.
- Like with any bill, treat your retirement savings as an obligation and automate it to leave your account on a set date monthly or biweekly. If you time this with your paychecks, it will simply feel like you took a small pay cut.
- If you don’t feel like there’s any room to take that pay cut, look at where you can trim your expenses or make extra money. In doing so, the extra cash you find can be put away for retirement saving.
Where should I park my cash?
Saving for retirement could mean putting money into a savings account or it could mean investing it. With a longer time horizon, your ability to take on risk and ride out any fluctuations in the stock market is higher than someone much older. This gives you a variety of options for investing and the opportunity to grow your funds over the long term.
Speaking to an expert is also a good way to start the discussion and develop a retirement plan. Regardless of where you are in life, a financial advisor can work with you to assess your current situation and help make your retirement dreams a reality.
No matter how you decide to save for retirement, the trick is to start. Develop a plan, find room in your budget and invest in a way that works for you. Retirement planning doesn’t have to be a chore. Taking the time to outline your goals in your midlife will mean peace of mind in your 60s, 70s and beyond.
Foresters FinancialTM has been helping everyday families achieve their financial goals for more than 140 years. For more information on Foresters Financial, click here.
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