With all the economic shakeups of the last few years, your retirement plans were likely set to the side. Or perhaps you haven’t had time to consider retirement yet.
No matter your age or phase of life, you can still plan and save for retirement. Follow these tips to create a solid retirement strategy.
In Your 20s and 30s: Start Planning
Your 20s and 30s are full of milestones: graduating college, entering the workforce, buying a home or starting a family. Your financial priorities are likely to be narrow-focused on any current debt, but there are still ways to plan for retirement without straining your finances.
Get comfortable budgeting
Tracking your spending is the first step to financial literacy and understanding where your money is going each month. There are many apps that will help you track your spending, set goals and keep an eye on your accounts. You can then set a budget for yourself based on your expenses. Developing this skill is critical to your future financial success.
Start saving early
If your employer offers a 401(k) match, it’s a fantastic idea to start saving, even if it’s small. A great way to get started is to start small and then increase the amount you set aside each year, as your budget allows. Investing early gives your compounding earnings the most amount of time to grow.
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In Your 40s and 50s: Ramp Up Your Savings
Many people begin seriously taking a look at their retirement savings in their 40s and 50s. This phase of your life is a great time to increase the amount you’re saving and plan for the future.
Increase money set aside
You may find more opportunities to limit your expenses each year. Are your kids out of the house? Now’s the time to downsize. A financial planner can help you review your current expenses and areas they can be reduced. You can then re-invest this money into your retirement savings.
Prepare for the unexpected
Unexpected costs can derail all your retirement plans. While you can’t plan for everything, you can take a few steps to reduce the amount of potential big expenses down the line. Ensuring that you and your spouse have a good life insurance policy is a good first step. You should also start looking into medical plans for after you retire, as Medicare only covers base costs. A health savings account might be a smart financial option to create a nest egg in case of emergencies, so you don’t have to dip into your retirement.
In Your 60s and 70s: Set the Plan in Motion
In your 60s and 70s, you’ll be ready to transition out of the workforce and tap into that retirement. There are a few more steps to take to maximize your portfolio.
Decide when to collect Social Security
The decision of when to collect social security is the most challenging one, and it doesn’t have a one-size-fits-all answer. If you collect too early, your monthly benefit will be permanently reduced. Waiting longer increases your monthly benefit, but requires you to continue working and may not be physically doable. Sit down with a retirement planner to take a look at your expenses, expected monthly benefit and other factors to decide the best possible time to start collecting Social Security.
Prepare to transition out of the workforce
When you near retirement age, it’s time to scale back on any risks and settle into a stable plan. Within five years of retirement, avoid any major investment changes and roll back any risk exposure in your retirement accounts. You’ll still want to keep some investments as your retirement could last several decades, but now isn’t the time to make big, all-or-nothing decisions.
Practical Retirement Advice with Greater Midwest Financial Group
Whether you’re an employee or a small business owner, saving for retirement is essential. But in your day-to-day life, it can be challenging to plan for two years down the road—much less 20 or 30.
That’s where Greater Midwest Financial Group fits in. We’ll work with you to develop a sound retirement plan that attempts to maximize your retirement goals. It doesn’t matter if you’d love to play golf all day, read books on the beach or give back to others. We’ll help you do what you enjoy.
Work with our experienced financial advisors and get the chance to:
- Explore the amount of risk you should take for returns you can potentially expect
- Ease the transition during pre- and post-retirement years
- Plan for a lifetime of income stream
- Arrange for liquid cash to travel or make major purchases
- Prevent inflation from destroying your purchasing power in the second 10 years
You can depend on GMFG to periodically monitor your retirement plan and make necessary adjustments so you can keep enjoying retirement.
Economic factors, life events and other factors can change your financial plans over your working life. Download our e-book for tips to plan, no matter what you have saved so far.
Greater Midwest Financial Group is a financial advisor firm serving St. Paul, Minneapolis and the wider Twin Cities area. We specialize in wealth management, retirement planning, asset management and other personal finance needs.