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Whether you’ve just started your career or are nearing the end of it, retirement is probably top of mind. To ensure you have enough money to enjoy your retirement however you wish, setting goals and planning ahead is essential, but when should you start planning?
There’s no specific age when you must start planning for retirement, but the earlier you can start saving money, the better. Fidelity Investments recommends you save at least one time your salary by age 30 and 10 times your salary by age 67. If you’ve already started saving, great! If you haven’t, don’t worry! It’s never too late to start – consider these steps to begin planning.
First, determine your ideal retirement age and how much money you will need in retirement. AARP shares that you’ll need about 80 percent of your pre-retirement income to maintain your current lifestyle in retirement. Take time and determine what you anticipate spending during retirement and whether any lifestyle changes require additional funds. If you need more assistance calculating this total, NerdWallet offers a free retirement calculator to estimate how much money you will need.
You can also work with a trusted financial consultant who offers retirement planning services to help you start this process. They can provide more details on inflation, the stock market, social security benefits, and investment programs, all of which can impact your retirement savings.
Second, once you’ve determined how much money you will need, it’s time to choose a retirement savings plan. You may have heard of 401(k)s, 403(b)s, IRAs, or, if you live in Canada, RRSPs. But what do all these numbers and letters mean? These are all different types of retirement savings accounts that may or may not be available to you depending on your unique situation.
Some employers offer plans with added benefits like an employer's match, and some accounts can be opened at your local bank, credit union, or an online brokerage. Your employer or government may also offer pension plans, and if you’re self-employed, there are other retirement savings options for you, too.
Now, that’s a lot to unpack, so working with a reputable financial consultant specializing in retirement planning services is a good idea to ensure you fully understand your options and feel confident in your choices. Your financial consultant can evaluate your options and help you determine which savings plan is best for you. They can also explain the difference between saving pre-tax and post-tax dollars, how to properly allocate those funds into your accounts, and annual contribution limits. In addition, your financial consultant can guide you on investing the funds in your accounts based on your age, how much money you need, and when you plan to retire.
After determining how much money you will need and deciding on a retirement plan, start a budget that includes your monthly savings for retirement. Be sure that your monthly savings will help you reach your goals. If you need more guidance on budgeting, check out BBB’s tip on 10 things to help you create a budget and stick to it.
Remember to check in on your savings and budgets often to ensure you are still on track to reach your retirement goals. Recent life events like getting a new job or a promotion, losing a job, starting a family, or receiving an inheritance can impact your spending and saving goals. Re-evaluate your situation annually and adjust your budgets as needed. As you approach retirement, your financial consultant may adjust your fund investments to ensure you meet your goals.
Are you looking for assistance with the retirement planning process? Finding the right financial consultant for retirement planning can be one of your most important decisions. Suppose your consultant will be helping you open savings accounts and manage investments. In that case, you’ll need to share your financial and personal information with them, like your bank account numbers and social security number. Therefore, you must find someone you can trust.
Always look for the BBB Seal when searching for a financial consultant. BBB Accredited Businesses adhere to the BBB’s Standards for Trust and have committed to operating with your best interests in mind.
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Read BBB’s tip on finding someone trustworthy and reputable to help manage your finances.
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