retirement plan

Start your retirement plan now!

Unless you’ve mastered time travel, you will get older… and hopefully, with this advice, a bit wiser.

Retirement planning is seldom top of mind in your 20’s, 30’s and 40’s (or in your mind at all!) But starting early is the easiest and most painless way to set yourself up for freedom in the future.

Life spans are getting longer and seniors more active. If spending 25 years in a rocking chair doesn’t excite you, how will you finance a satisfying life in the third chapter?

The new year is a great time to kick start your retirement plan.

Start now!
As a money coach, I have many clients in their 50’s or 60’s who have saved little while wondering how to fund the years ahead. The truth is, it’s daunting if you wait to plan your retirement until then.

With compound interest and time on your side, you have a huge edge if you start your retirement plan when you are young. By saving and investing a little now, you can reap big rewards later. Consistent savings is the key. Investment returns may vary, but, for example, if you invest $500 a month for 40 years at 8% annual return, you can end up with $1,745,000. Nothing to sneeze at! Even if you have little to spare for savings now, start small.

Planning aside, life takes unexpected dips and turns. Time is the force that helps equalize our long term financial health when life happens. The longer the period you save, the greater the rewards later.

How do you find the money to save without sacrificing the present?

Here’s how:

Get in control of your money.
Have a spending plan. If your finances are a mess now, you can’t balance the present, let alone save for the future. Begin by getting crystal clear on what you are earning and where it’s going. What do you need to change?

Now is the time to analyze your spending behaviors. Do you shop in response to frustration at work or loneliness at home? If your emotions are driving your
spending, now is the time to do some deeper work and break sabotaging habits.

If you are in control of your money, you are in the drivers seat now and down the road.

plan for retirement

Earn more and live below your means.
You have income and expenses. If you spend more than you earn, you can’t save. It’s pretty simple. You can either increase your earning potential or spend less than you make. The difference is your future.

My client “Linda” is 52 and has almost no retirement savings. She earns an excellent income, but has accrued $85,000 in credit card debt over the years. Although some debt is necessary, like mortgage debt or student loans, when mired in debt from spending beyond your means, like Linda, saving for the future becomes a dream.

Pay for your life as you go with room to spare and savings will become a reality.

Get educated on finances.
Read articles. Take a class. We are not genetically encoded with financial understanding, so don’t be embarrassed to ask for help.

Liz Weston, author and financial columnist, has a great compilation of Best Money Sites where you can find resources that run the gamut of money topics, including planning for your retirement. It’s a great place to start. Not everyone wants to be an investment whiz, but learn the basics.

retirement plan

Although money might be tight, take advantage if your employer offers to match your 401K contributions. If not, you are leaving free money on the table.

Decide on the most comfortable way to invest. A fee only financial planner is a great place to start if you want some personal help in devising a retirement plan. Do it yourself or work with a financial planner. But do it.

Love your kids, but save for college last.
Ideally, it’s great if you can save enough for both college and retirement.
But we all know how difficult that is to do. If you want the best for your kids, prioritize retirement savings before college savings. You can take out loans for college, but not retirement. Although you don’t want to saddle your kids with student debt, it’s better then the burden of supporting their parents down the road.

“Procrastination is wealth suicide on the installment plan” wrote Financial Consultant Todd Tressider. In this day and age, saving money for retirement can seem insurmountable. By starting early, you still might not master time travel, but you’ll have the financial freedom to kick the rocking chair aside on the way to a new adventure.

I wish you all a good year to come!