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We can’t call on many constants in life, but one thing that eventually reaches us all is retirement. We’ll all get to a point where we have to retire from full-time work. It’s the natural way of life – some people can’t wait for this moment while others fear it.
There’s no need to fear or worry about your retirement; it’s something you should learn to embrace! You can’t avoid it and the best way to enjoy a happy retirement is by planning ahead. Following that trail of thought, we’ve composed a list of the golden rules to consider when preparing for this moment in life. Read them, apply them to your life, and reap the benefits when retirement comes your way.
Rule 1: Don’t Wait Until It’s Too Late
This is up for debate, but we’d say the biggest mistake in retirement planning is leaving it until it’s too late. Most people will retire in their sixties – and some won’t start thinking about retirement until they’re in their fifties. If you start planning at that point, you’re only leaving yourself with 10 or so years to get things ready!
That’s a crazily small amount of time in the grand scheme of things. Yes, you might start thinking about retiring around this age, but the planning must begin a lot sooner. We’d go as far as to say it’s something to prepare for the moment you get a full-time job.
Rather than giving yourself 10 or 15 years to prepare for what lies ahead, you’ve got a good 30 or 40 years. This probably sounds like a stupidly large amount of time, but you’ll understand why starting early is important as you read the second rule.
Rule 2: Get Your Finances in Order
Don’t neglect financial planning when looking ahead to your retirement. Most employers provide a 401(k) and many others can give separate pension plans. Both of these – plus any private pensions you set up – will go a very long way to supplying you with money when you retire. After all, you won’t have a full-time job anymore, so your income must come from somewhere.
As well as having regular savings goals – like saving up for a house or having an emergency fund – you need separate investments for retirement. This will include the things mentioned above, as well as any additional investment opportunities you won’t cash in until it’s time to officially retire. The goal is to put yourself in a commanding financial position when this time comes around; with the right planning, you could have enough money to fuel your golden years without needing to work again!
That’s why Rule 1 is so critical; start saving from a young age and you’ll have more than enough money to retire successfully. Think about it – let’s say you put $1000 away every month for various retirement investments. Not including any interest gained on these savings, you’d generate $12,000 a year. If you start doing this when you’re 50, and you retire when you’re 67, you’ve saved a minimum of $204,000. That’s pretty great – but imagine you start doing this when you’re 30. Suddenly, you’ve got $440,000 stashed away without factoring in interest, pension contributions, etc.
Or think about it another way. Maybe you have a specific saving goal for retirement? It’s easier to reach that goal if you start sooner – and you put less pressure on how much you need to save. You can save less money every month yet achieve the same goal!
Rule 3: Consider Your Lifestyle Goals
What do you want to do when you retire? Are you one of those people who wants to travel the world and explore as many countries as possible? Do you want to relax in a nice condo by the sea, or would you rather do some semblance of part-time work?
Everyone’s different – but you need to work out your lifestyle goals as you plan for retirement. To start, it helps you with financial planning as you can figure out how much you need to save. Moreover, it helps you with things like figuring out where to live. Are you going to stay in your family home? Perhaps you might downsize to something smaller before transitioning to senior living accommodation when you’re a bit older.
Many considerations present themselves and your retirement will be far more enjoyable when you have a clear plan ahead. Know what you want to get out of retirement, and then plan for it!
Rule 4: Make Periodic Reviews & Adjustments
Finally, the most critical rule of all is to constantly review and adjust your retirement plans. It’s not something you need to focus on every month but get into the habit of re-assessing things every year or so. To be honest, even that might be too frequent; perhaps you’re better off assessing things when there are big changes in your life.
For example, maybe you enter your mid-thirties and have your first child – how does that affect your original retirement plans? Another common change is getting a new job. Perhaps you got promoted and now earn significantly more money than when you started your initial plans. You have to adjust your retirement savings goals to reflect your earnings, allowing you to stash more money away. The opposite is true if you lose your job or take a pay cut; you must adjust your financial planning so you can still live a good life now while saving for the future.
Reviewing where you stand ensures you’re always on top of things and keep making the right decisions. It also stops you from getting decades down the line and realizing you’ve made a grave error and haven’t saved enough!
All of these rules are important, though the first two are ones we need to highlight in this conclusion. Plan for retirement in your twenties and your future self will thank you. It gives you so much time to save cash for these golden years, letting you live life to the fullest.
*This article is based on personal suggestions and/or experiences and is for informational purposes only. This should not be used as professional advice. Please consult a professional where applicable.