Retirement Planning is a 40-Year Journey
Retirement planning has been described as a “40 (or more) year journey” from the start of someone’s working life in their 20s through retirement in their 60s (or beyond). However, it is actually much longer, if you consider how long someone can live during retirement. Unlike shorter-term financial planning goals like buying a car, a house, or saving for a child’s education, retirement planning can literally take place for seven or eight decades (e.g., 20s through 80s or 90s).
Regardless of someone’s stage in life and where they are on their retirement planning journey, five retirement planning principles are timeless and apply to everyone:
¨ Set a Retirement Savings Goal– Once you set a goal, develop a retirement savings action plan. Determine your savings need with a Ballpark Estimate calculation and then begin taking steps to save the required amount.
¨ Save Early and Often– Set up automatic savings plans through an employer and/or investment company so that deposits are made regularly (e.g., 5% of income every payday), regardless of stock market conditions.
¨ Invest Part of a Raise– When you get a raise, bonus, freelance work pay, or other increase in income, invest half of it. If your employer offers “auto escalation,” sign up so that increases in savings take effect automatically.
¨ Don’t Delay Savings Any Further- It’s never too late to start investing for retirement. If you haven’t saved anything yet for retirement, the best day to get started is today.
¨ Stay Educated About Retirement Planning- Changes to Social Security rules, Medicare, and retirement savings plans are not unusual so it is important to stay up to date via financial publications, media, social media, etc.