Let's talk about that dirty "R" word -
R E T I R E M E N T
20-30 year olds
You're young and free and you want to spend money and have fun! Who wants to think about retirement in their 20s? Well, YOU do actually.
There's nothing wrong with having fun BUT, while it may seem light years away, your retirement days will in fact be here before you know it. And you do NOT want to be caught with your proverbial pants down. So think ahead. Maybe you can SAVE some of that money you're spending so freely on drinks and dinners out!
And when you do start saving, remember, this is NOT the time to be conservative. In fact, when you're young, you need to sock away as much of your income as you possibly can. Be aggressive and put away the maximum amount.
If you're self-employed, set up an IRA or SEP account. If you work for a big firm, put the maximum allowed into a 401 (K). Get advice on how to set up all these different kinds of investments.
Your 40's
It's time to come back down to earth and start grounding yourself in the realities of your life. You can begin this walk on the 'real' side by
1. Reigning in your credit card debt.
2. Maximizing your contributions to your retirement plans.
3. Consolidating your 401 (K) Plans from previous employers.
Consistent steps like these, at this time in your life, guarantee you'll be in great shape by the time retirement rolls around!
Your 50's and 60's
If ever there was a time to take stock of your situation, the time is NOW!
For instance, when was the last time you checked in with your 401 (K) to make sure all was well? Or confirmed that all your investments were properly allocated? At this (late) stage of the game it's all about rebalancing, asking pertinent questions and playing catch up. (Especially if you didn't follow our advice in your 20s :)) In your 50s and 60s you're going to have to be hands on when it comes to rebalancing your portfolio, because you have a shorter time horizon.
The first step is to start thinking about when you actually want to retire. This will make a big difference in the pace you set for investing and saving i.e. if it's 70 you can be more aggressive than if your retirement goal is 62. Ideally you want to give yourself a 15-20 year cushion of time.
Make it a priority to take a look at what you have in your retirement plan every year. And go back and revisit it regularly to make sure it makes sense. Capture the highs and put it into things that haven't appreciated.
Next, take stock of what you currently own and then ask yourself some hard hitting questions:
- Is your credit card debt taking over?
- If you had several jobs over the years, have you consolidated their respective 401 (K)s into an IRA rollover?
- If you own three houses, do you really need them all?
- Do you still want to take 3 or 4 vacations a year, or cut back and start saving some of that money?
- Is long-term care going to be an option for you or your partner?
Start putting your retirement budget together now, so that you can clearly see what kinds of funds you are going to need, versus what you are currently projected to have, when you retire. And remember to review your Social Security benefits and any pension plans you might qualify for.
Your 50s and 60s are the time to nail down the organization process that will lead to a happy, healthy retirement.
