Whether you are just starting out in the professional world or have been working for many years, retirement planning shouldn’t be something that is pushed aside and deemed unimportant. You have only one shot at securing your financial future, so the earlier you start the better.
Even though it is common knowledge that starting to save for retirement as early as possible is the best practice, some still ask, â€œDo I really need a retirement savings plan at all?â€ One reason the answer to that question is an emphatic â€œYESâ€ is that you never know what the future will bring and unexpected and sudden circumstances may arise. For instance, people assume they will be able to continue working as long as they need to live; however, as we age sudden medical issues can creep out of nowhere changing long-term plans. Without a retirement savings plan to fall back on, we could be left without a means to maintain our lifestyle.
Although aging may be beyond your control, one game changer that you have the upper hand in is changing your mind about retirement. As you continue to work, you may realize that you actually do want to retire at a certain age in order to fulfill your life goals of traveling or having more time for your loved ones. For whatever the reason that you want to retire, you will need retirement savings to support your desired lifestyle.
The best thing about this is that creating a retirement plan doesn’t have to be hard or time consuming; here are three ways to create a sturdy plan.
- Years to retirement:Â Calculate the years to your retirement. Determine the age you would like to retire and define the timeframe. You should also estimate how long your retirement years could last (30 or more years in some cases). There are plenty of online calculators you can use for this exercise.
- Know your risk tolerance:Â It is crucial that everyone knows his or her tolerance for risk. By knowing your risk level, you will be able to choose the investments that are right for you and your financial goals. You should pick investments that are personalized to your needs and where you are in life.
- Contribution amount:Â After you figure out the age you want to retire the years your retirement could last and your risk tolerance, you will need to determine how much you should set aside each year to reach your retirement goals. If you decide to contribute to an employer-sponsored retirement plan and your employer offers a match, you should contribute at least enough to receive the full company offering.
Hopefully after reading this, you are now convinced that having a retirement plan is necessary for every individual no matter what stage they are in life. Whether you are only 15 years away or four decades away from the typical retirement age, it’s never too late or too early to start saving. Every dollar that goes towards your retirement counts, so start a retirement plan now to take control of your financial future.
(This has been a guest post by Scott Holsopple. Â He is the president and CEO of Smart401k, offering easy-to-use, cost effective 401(k) advice and solutions for the everyday investor. His advice has been featured on various news outlets, including FOX Business, USA Today and The Wall Street Journal.)