4 Ways You Can Prepare for Retirement Now
It’s never too early to plan for retirement. Here are a few ways to start saving now—the future you will thank you for it.
Preparing for retirement while you’re still young may feel a lot like purchasing a cemetery plot when you’re healthy, but avoiding retirement planning now might mean you may not even be able to retire. Here are four easy ways to take control of your retirement, no matter your age:
Step 1. Do the math.
Let’s start from the beginning: How much money do you need to retire? Nerdwallet has a great calculator that will help you figure out your individual goal. Let’s say, for instance, you’re 30 years old and make $50,000 per year. If you plan on living until you’re 95 and will be spending about $2,900/month (that’s accounting for inflation), you should be putting aside about $550/month. Why so much? Because in order to retire with the same standard of living, you’ll have to have $1,601,338 saved for retirement. Granted, we haven’t factored social security benefits in this scenario, but this is a rough estimate.
Step 2. Don’t panic.
If you’re staring at that $1.6 million estimate in the paragraph above and feel an urge to cry, run away, or disconnect altogether, you’re not alone. Yes, it’s a big number, but it’s not unattainable. The absolute wrong thing to do is behave like the 56% of Americans who don’t even have $10,000 saved for their retirement. Ignoring the need to save (and yes, it’s a need, not just a strong suggestion) for your retirement will mean you’ll be working for the rest of your life.
Step 3. Make a game plan.
If you have a traditional job environment, you’ll likely have someone in HR who will be more than happy to sit down and explain your employee saving benefits to you. If your company offers a matching 401k, absolutely use it, because a matched 401k is free money.
If your company doesn’t have a retirement savings plan, schedule a meeting with a financial advisor. He or she will crunch some serious numbers for you and give you an idea of the smartest way to invest. Advisors will also give you different outlooks depending on how aggressively you’d like to invest your savings: More aggressiveness means greater risk. They can also automate your savings, which means you can put your retirement on autopilot and not worry about it.
There are plenty of free apps like Wisebanyan that will get you started saving immediately. Don’t fall into a trap of thinking that $20/month won’t do anything—that savings can quickly balloon, and it will also get you into the habit of saving. Once you’re accustomed to setting money aside, you’re more likely to increase the amount of money you save.
Step 4. Start now.
Seriously, start today. Don’t start on some mystical future date when you’ll have more disposable income, because that date may not ever arrive. If you don’t have $50/month to set aside, then save $20/month and make a goal to increase that number next year.
Start now by saving for your retirement, no matter your age. You'll be proud of yourself for taking control of your money when everyone else is spending it without thinking.
Have you started saving for retirement? Tell us in the comments. And while you’re here, check out our other healthy living articles.