Planning for Retirement at Every Age
Blog icon
The economy has changed drastically over the past 20 years, and so has the way most of the young people in the country think about retirement. Gone are the days of working a lifetime for a single company with a guaranteed retirement fund. Today’s workforce functions with a lot of moving parts and most of the time saving for retirement is left up to the individual. Whether you’re in your 20's and are just beginning to think about retirement or you’re in your 60's and about to retire, we’ve got tips for how to make the most of your golden year finances.
In Your Teens
Teenagers have a lot of things on their minds; Retirement typically isn’t one of them. However, thinking about retirement this early can lay a solid foundation for the rest of a person’s life and make it easier to prepare for retirement later on.
Build Healthy Financial Habits
Passing on healthy financial habits to your children isn’t always the easiest of tasks. One thing that can help your teenage kids learn financial responsibility is getting a job and managing their own money and time. Understanding basic healthy financial principles will help your child successfully plan for retirement later on.
Open a Roth IRA
A Roth IRA is an individual retirement account that allows an individual to contribute up to $5,000 each year of their after-tax income. Teens can open a Roth IRA as long as they have an earned income. They can contribute 100% of their earnings every year if it’s less than $5,000, but that might be a hard sell when your child first discovers the freedoms of driving, eating out on their own, and shopping with their own money. Keep in mind that a Roth IRA can only be contributed to from earned income, so parents and grandparents can’t add to the account. If your teen can set aside part of their earned income over the course of the year, they’ll have a huge leg up on those who wait to open a Roth IRA ten years later. They’ll accrue nearly double in retirement savings over the course of their life.
In Your Twenties
Save Automatically
You’re much more likely to save money if it’s automatically deducted from your paycheck or bank account. Making the conscious decision to transfer money to a retirement account is often overpowered by more immediate gratifications. Many employers offer automatic deductions from your direct deposit that can help you contribute before you even miss the money from your paycheck. Your future, retired self will thank you for making the decision to sacrifice now rather than later.
Find an Employer with Retirement Benefits
One of the best things to look for in a potential employer after you graduate from college is built-in benefits, including health insurance and retirement savings. If you can find an employer that provides a 401k retirement plan, that’s a mark in their favor. A 401k is an employer-sponsored retirement plan that automatically deducts your contribution from your paycheck before taxes are taken out. That means pure profit is going toward your retirement. Some employers even participate in 401k matching or partial matching, which can help you save up to double for your future self.
Find a Financial Advisor
If you struggle to manage your own money, it never hurts to ask for a little bit of help from a professional. Financial advisors manage money for a living and understand its complexities better than most people. When you’re looking for an advisor, make sure you find one who doesn’t pressure you into anything, but rather makes educated suggestions and can explain their reasoning. A financial advisor may be able to point out future expenses and possible places to save that you might not even be aware of.
In Your Thirties
Pay Off Student Debt
If you sought the help of a financial advisor in your twenties, they probably helped you to find ways to get a jump-start on paying off your student loans. Your thirties are the perfect time to finish up paying them off so that they stop accruing interest and taking money out of your pocket that could go toward retirement. The longer you let that debt drag on, the less money you’ll have later in life.
If you haven’t started paying on your student loan debt, now is the time to get going. You’ll regret waiting any longer and getting on a payment plan will take some financial stress off of your shoulders. It’s also worth researching to see if your employer will help you pay off some of your student debt.
Increase Your Earning Potential
Increasing your earning potential seems complex and difficult, but it comes down to investing in your existing skills and developing new ones to make sure you’re earning the most you possibly can. Taking online courses, going to grad school, learning to code, or picking up a side job are all ways to continuously develop yourself and earn at the top of your potential. The more you earn, the more you can put aside for retirement.
Understand Compound Interest
Compound interest is the principle at the center of all finance. It’s a hard-to-understand concept that will help you rapidly snowball your wealth, so it’s worth taking the time to wrap your mind around. Compound interest occurs when the interest that accrues to an amount of money begins to accrue interest itself, in effect, increasing your savings exponentially. Saving sooner is more important than saving more, because the more time you allow your funds to accrue interest, the more that interest will begin to accrue on itself. We know, it’s complicated; but it’s worth at least trying to understand or putting your money in the hands of a financial advisor who can make sense out of it.
In Your Forties
Determine Your Retirement Number
When you reach your forties, you’ll be able to more accurately imagine and plan for the type of lifestyle you’ll lead in retirement. Thinking concretely about how you’ll want to live in your golden years will help you come up with your retirement number, or the amount of money you’ll need to save in order to pay for your expenses and live comfortably. Once you have this number in mind, it’ll become much easier to save exactly what you’ll need.
Increase Savings & Decrease Costs
In your 40's, you’ll be making more money than ever before in your life. That extra income gives you the ability to save much more than you did in the past as well. It’s also a great time to work with your financial advisor to ensure that your investments are earning as much as possible.
If you can decrease your costs of living in combination with maximizing your savings, you’ll set yourself up for retirement success. To cut costs, you can eliminate investments that aren’t earning, downsize your home and belongings, and cut out small everyday expenses that add up. Making your coffee at home instead of buying a latte every day is well worth the extra money you’ll have after you retire.
Max Out Your Retirement Accounts
If you haven’t already, your 40's are a great time to start contributing the maximum amount allowed to your Roth IRA or your 401k. The max contribution to a Roth IRA is $5,000 a year. If you’re under 50, you can contribute up to $18,000 a year to your 401k; If you’re over 50, you’re allowed to make “catch-up” contributions of an additional $6,000 per year. These numbers can fluctuate every year to account for inflation, so check in with your financial advisor to make sure your retirement investments are in order.
In Your Fifties
Work a Little Longer
You’re almost there! When you’re approaching retirement age, it’s easy to forget that your career is your biggest and best asset and you shouldn’t be so quick to give it up. Staying at work a little longer, especially if you enjoy your job, will pay off tenfold after you decide to retire. Every year that you continue working is bonus income that your future self can enjoy and indulge with.
Invest, Don’t Speculate
Your fifties are not the right time to risk your hard—earned money for a larger return. Investing responsibly in low risk, guaranteed stocks and funds is a great way to ensure your money is there when you need it. Communicate openly with your financial advisor to make sure you’re doing the right thing for your financial retirement goals.
Cut Your Costs Even More
If you can downsize more, do. Holding onto extra possessions, vacation rentals, or a large home will only cause you financial stress later in life. If you want to travel or spend time with family when you’re retired, having extra possessions will only weigh you down and cost you money.
In Your Sixties and Beyond
Spend Responsibly
After you’ve retired, remember that you’re still on a fixed income. Having all the time in the world to do the things you love doesn’t mean you should go off the deep end and spend excessively. Stay on track with your budget to ensure that you can spend all of your retired years living comfortably and enjoying life.
Continue to Invest
You’ve retired, but your investments can continue to work. Don’t pull all of your funds out just because you’ve made it to retirement. If you’ve made responsible choices when it comes to your investments, you can continue to earn an income even after you’ve retired.
Rely on Your Financial Advisor
After you’ve retired, your financial advisor can continue to help you make the smartest choices about your wealth. Your advisor has a constant tap in to the market, and they know when it’s best to pull your assets and investments out and when you should continue to earn. If you’ve got a good financial advisor, you can rely on them to keep you informed and help you manage your money while you’re enjoying the fruits of a lifetime of labor.
If you need help paying off student loans, paying for continued education, or getting everything in order for retirement at any age, you can turn to AmeriCash Loans. We can get you secure cash loans fast with no risk and no credit check. Apply online or in store today!
In Your Teens
Teenagers have a lot of things on their minds; Retirement typically isn’t one of them. However, thinking about retirement this early can lay a solid foundation for the rest of a person’s life and make it easier to prepare for retirement later on.
Build Healthy Financial Habits
Passing on healthy financial habits to your children isn’t always the easiest of tasks. One thing that can help your teenage kids learn financial responsibility is getting a job and managing their own money and time. Understanding basic healthy financial principles will help your child successfully plan for retirement later on.
Open a Roth IRA
A Roth IRA is an individual retirement account that allows an individual to contribute up to $5,000 each year of their after-tax income. Teens can open a Roth IRA as long as they have an earned income. They can contribute 100% of their earnings every year if it’s less than $5,000, but that might be a hard sell when your child first discovers the freedoms of driving, eating out on their own, and shopping with their own money. Keep in mind that a Roth IRA can only be contributed to from earned income, so parents and grandparents can’t add to the account. If your teen can set aside part of their earned income over the course of the year, they’ll have a huge leg up on those who wait to open a Roth IRA ten years later. They’ll accrue nearly double in retirement savings over the course of their life.
In Your Twenties
Save Automatically
You’re much more likely to save money if it’s automatically deducted from your paycheck or bank account. Making the conscious decision to transfer money to a retirement account is often overpowered by more immediate gratifications. Many employers offer automatic deductions from your direct deposit that can help you contribute before you even miss the money from your paycheck. Your future, retired self will thank you for making the decision to sacrifice now rather than later.
Find an Employer with Retirement Benefits
One of the best things to look for in a potential employer after you graduate from college is built-in benefits, including health insurance and retirement savings. If you can find an employer that provides a 401k retirement plan, that’s a mark in their favor. A 401k is an employer-sponsored retirement plan that automatically deducts your contribution from your paycheck before taxes are taken out. That means pure profit is going toward your retirement. Some employers even participate in 401k matching or partial matching, which can help you save up to double for your future self.
Find a Financial Advisor
If you struggle to manage your own money, it never hurts to ask for a little bit of help from a professional. Financial advisors manage money for a living and understand its complexities better than most people. When you’re looking for an advisor, make sure you find one who doesn’t pressure you into anything, but rather makes educated suggestions and can explain their reasoning. A financial advisor may be able to point out future expenses and possible places to save that you might not even be aware of.
In Your Thirties
Pay Off Student Debt
If you sought the help of a financial advisor in your twenties, they probably helped you to find ways to get a jump-start on paying off your student loans. Your thirties are the perfect time to finish up paying them off so that they stop accruing interest and taking money out of your pocket that could go toward retirement. The longer you let that debt drag on, the less money you’ll have later in life.
If you haven’t started paying on your student loan debt, now is the time to get going. You’ll regret waiting any longer and getting on a payment plan will take some financial stress off of your shoulders. It’s also worth researching to see if your employer will help you pay off some of your student debt.
Increase Your Earning Potential
Increasing your earning potential seems complex and difficult, but it comes down to investing in your existing skills and developing new ones to make sure you’re earning the most you possibly can. Taking online courses, going to grad school, learning to code, or picking up a side job are all ways to continuously develop yourself and earn at the top of your potential. The more you earn, the more you can put aside for retirement.
Understand Compound Interest
Compound interest is the principle at the center of all finance. It’s a hard-to-understand concept that will help you rapidly snowball your wealth, so it’s worth taking the time to wrap your mind around. Compound interest occurs when the interest that accrues to an amount of money begins to accrue interest itself, in effect, increasing your savings exponentially. Saving sooner is more important than saving more, because the more time you allow your funds to accrue interest, the more that interest will begin to accrue on itself. We know, it’s complicated; but it’s worth at least trying to understand or putting your money in the hands of a financial advisor who can make sense out of it.
In Your Forties
Determine Your Retirement Number
When you reach your forties, you’ll be able to more accurately imagine and plan for the type of lifestyle you’ll lead in retirement. Thinking concretely about how you’ll want to live in your golden years will help you come up with your retirement number, or the amount of money you’ll need to save in order to pay for your expenses and live comfortably. Once you have this number in mind, it’ll become much easier to save exactly what you’ll need.
Increase Savings & Decrease Costs
In your 40's, you’ll be making more money than ever before in your life. That extra income gives you the ability to save much more than you did in the past as well. It’s also a great time to work with your financial advisor to ensure that your investments are earning as much as possible.
If you can decrease your costs of living in combination with maximizing your savings, you’ll set yourself up for retirement success. To cut costs, you can eliminate investments that aren’t earning, downsize your home and belongings, and cut out small everyday expenses that add up. Making your coffee at home instead of buying a latte every day is well worth the extra money you’ll have after you retire.
Max Out Your Retirement Accounts
If you haven’t already, your 40's are a great time to start contributing the maximum amount allowed to your Roth IRA or your 401k. The max contribution to a Roth IRA is $5,000 a year. If you’re under 50, you can contribute up to $18,000 a year to your 401k; If you’re over 50, you’re allowed to make “catch-up” contributions of an additional $6,000 per year. These numbers can fluctuate every year to account for inflation, so check in with your financial advisor to make sure your retirement investments are in order.
In Your Fifties
Work a Little Longer
You’re almost there! When you’re approaching retirement age, it’s easy to forget that your career is your biggest and best asset and you shouldn’t be so quick to give it up. Staying at work a little longer, especially if you enjoy your job, will pay off tenfold after you decide to retire. Every year that you continue working is bonus income that your future self can enjoy and indulge with.
Invest, Don’t Speculate
Your fifties are not the right time to risk your hard—earned money for a larger return. Investing responsibly in low risk, guaranteed stocks and funds is a great way to ensure your money is there when you need it. Communicate openly with your financial advisor to make sure you’re doing the right thing for your financial retirement goals.
Cut Your Costs Even More
If you can downsize more, do. Holding onto extra possessions, vacation rentals, or a large home will only cause you financial stress later in life. If you want to travel or spend time with family when you’re retired, having extra possessions will only weigh you down and cost you money.
In Your Sixties and Beyond
Spend Responsibly
After you’ve retired, remember that you’re still on a fixed income. Having all the time in the world to do the things you love doesn’t mean you should go off the deep end and spend excessively. Stay on track with your budget to ensure that you can spend all of your retired years living comfortably and enjoying life.
Continue to Invest
You’ve retired, but your investments can continue to work. Don’t pull all of your funds out just because you’ve made it to retirement. If you’ve made responsible choices when it comes to your investments, you can continue to earn an income even after you’ve retired.
Rely on Your Financial Advisor
After you’ve retired, your financial advisor can continue to help you make the smartest choices about your wealth. Your advisor has a constant tap in to the market, and they know when it’s best to pull your assets and investments out and when you should continue to earn. If you’ve got a good financial advisor, you can rely on them to keep you informed and help you manage your money while you’re enjoying the fruits of a lifetime of labor.
If you need help paying off student loans, paying for continued education, or getting everything in order for retirement at any age, you can turn to AmeriCash Loans. We can get you secure cash loans fast with no risk and no credit check. Apply online or in store today!
