They say the earlier your start planning for retirement the better, but don’t be discouraged if you’re just starting to think about retirement a little bit later into your career—as the saying goes, ‘there’s no time like the present.’ Planning for retirement doesn’t have to be overwhelming, especially if you begin by following these five steps:
1. Start and stick to a budget. Whether or not you’re even close to retirement age, you should learn how to develop a realistic budget – and stick to it. Get all your financial documents, bills, and credit card statements organized and create a budget that will help you stay on the right path. If you are serious about saving for retirement, you should take into account when you plan to retire and how much time you have until then.
2. Start paying off all your debt. If you currently have debt, you’ll want to try to pay that down before your retirement. If you’ve been only making the minimum payment on your credit card debt for a few years, you need to stop and up the ante a bit more. Paying the minimum is tempting, sure, especially if you’re on a tight budget. So, rather than paying less now and more later, try your best to pay more now and “later” won’t be nearly as long!
3. Enroll in a debt repayment program. Dealing with a significant amount of debt can feel overwhelming. Thankfully, there are hardworking professionals out there willing to assist you every step of the way. If you’re struggling to make payments, consider a debt management plan. These programs allow you to roll all your debts into one monthly payment, often at a lower interest rate. The sooner you begin to chip away at your debt, the more quickly you can throw more money into your savings and investments and begin to benefit earnings on compound interest.
4. Look at investments. If you’ve paid into a company 401K, that’s a good investment on your road to retirement planning. But financial experts suggest that having a diverse portfolio—mixing up stocks, bonds, and other investments like a Roth or Traditional IRA—will help secure your financial future. Because 401Ks and IRAs are affected by the market, it’s a shrewd move to make sure you also secure investments that are not affected by the market. While you’re young, you can make riskier investments for a higher return, but as you get older it’s best to make sure your investments are more secure.
5. Talk to an investment manager, and check-in with your retirement plans once a year. Meeting with your financial advisor now can help you make smart investments, figure out a withdrawal strategy, and help decide which plan is right for you and how to maximize your income—so that you can maintain your lifestyle and enjoy your golden years. It will also behoove you to check in with your retirement investments once a year so that as you get closer to retirement you know your savings are secure.
It’s never too early to start planning for your retirement and it’s certainly never too early to get out of debt. Start making the right moves today and enroll in a debt management program!