Whether you’re 25 or 55, you’ve likely come across countless articles talking about how to prepare for retirement. While the advice may be well-thought-out, and even helpful, it can be overwhelming.
You have to plan for a future you are decades away from facing. A lot can happen on this road called life, but you have the power to create a plan to prepare for retirement no matter your age. Below are a few tips for how you can set yourself up for a successful retirement throughout the different phases of your life.
In Your 20s
Be aggressive with your investments – One of the best parts about being in your 20s is having more time to withstand the ups and downs of the stock market. Take advantage of your youth and invest in a more high-risk stock portfolio.
Start saving – It may seem as if you have forever and a day to begin saving, but 50 will be here before you know it. One of the best ways you can start to prepare for retirement is to get in the habit of saving. Start saving 10 percent of all your income and put it in high-yield savings account that you can later add to an investment account.
In Your 30s
Diversify your investments – While you can still stand to be aggressive, you may want to start adding various types of investments to your portfolio. For example, begin looking into bonds and mutual funds to diversify when you can.
Get rid of debt – You might begin to rack up more expenses, which can lead to debt. Unfortunately, the more liabilities you have, the less you can contribute to your retirement. So, create a plan to get rid of your debt. While you may not be able to pay off everything in your 30s, you will put yourself on the road to being almost expense-free when you do retire.
In Your 40s
Review your investment and savings strategies – Make sure you have a plan for how much you want to have when you retire. Fortunately, you are starting to get a clearer idea of when you want to retire and the money you need to have to live a comfortable lifestyle when you do. So—if you haven’t already—figure out how much you need to start saving to retire to see if you are hitting those numbers now.
Make critical decisions regarding your children’s education – Today, many parents are conflicted about whether to pay for their children’s schooling or to prepare for retirement. It can be possible to do both, but you have to be realistic about what you can afford. So, discuss options (attending an in-state school, going to a two-year college, attending school abroad, or applying for scholarships) with your children. A solid school affordability plan frees you up to prepare for retirement.
In Your 50s and Beyond
Increase your contributions – As of this year, the IRS allows those 50 and up to begin saving an additional $1,000 in an IRA, or $2,000 if married. The contribution limit is even higher for a 401 (k).
Erase all debt – You are rounding the corner, and the finish line may be in view. Work on getting rid of all liabilities by creating an aggressive debt pay-down plan.
Prepare For Your Retirement. It’s Coming.
Preparing for retirement can be scary and confusing. There is so much that can happen between now and 65 (or whenever you choose to retire). However, if you develop goals, adjust your approach to meet them, and keep an eye on your retirement account, you can successfully prepare for retirement.
Here are a few additional resources to help you prepare while on the road to retirement.
Five Ways to Avoid Running out of Money During Retirement
3 Retirement Tips if You’re Single, Divorced or Widowed
USA Today Podcast: 12 Easy Ways to Save for Retirement