Whether retirement is five years or five decades away, it’s never too early or too late to prepare. Preparation can mean different things at different ages, but overall, the principals for preparation are the same. You should be saving and planning based on what you hope to do during those years, and the tips below can help.
Max Out Your Retirement Contributions
You may have heard this advice before, but what exactly does it mean? There is a maximum amount of money that you can contribute to your retirement plan, which varies based on the type of plan and your age.
If your employer is matching your contributions, this alone is a good reason to max out what you are paying in as much as possible. If you are younger, the money you put in will be worth a significant amount in a few decades.
If you are older, you should be saving as much as you can, especially if you did not do so when you were younger. You may want to visit a financial professional to talk about how to best manage your money given your long-term plans.
Lower Your Monthly Expenses
One reason people do not put more money into their retirement account is because they are struggling to keep up with their regular expenses. You should look at whether there are ways to save money that you might not have thought about. For example, a student loan refinance with a private lender can mean paying far less in interest in some cases.
You can see what your options are and whether this would save you money. You might also want to create a budget. You can use an app, a spreadsheet or just a pen and paper to do this. Once you start tracking your spending, you can usually find additional ways to save.
Know Your Retirement Lifestyle
What you hope to do after you retire may change a number of times throughout your life, or it might always remain the same.
Whatever happens, you should start thinking about what your post-retirement lifestyle would look like and then start checking in with yourself every few years about whether you still feel that way and what you need to achieve it.
If you are planning to lead a quiet life in a small town in a home you’ve paid the mortgage off on or to move to a country where the cost of living is very low, you won’t need as much money as if you hope to take a lot of cruises and send your grandchildren to college.
Another thing to think about is that you don’t necessarily have to plan to retire at the traditional age. Maybe it’s your dream to retire at 45, or perhaps you want to stay at your career until you are well into your 70s or even your 80s. Even if you don’t want to stop working, it’s good to save so that you are able to work out of a desire to do so instead of necessity.