5 Tips for Effective Retirement Planning
Regardless of a person’s life stage, retirement is an important consideration to make. Whether one is graduating from college, raising children or looking forward to the end of their career, they should determine what’s needed for a comfortable retirement. In this guide, readers will get some tips to prepare for life after work.
It doesn’t really matter how much one can save, but it’s important to start as early as possible, as compound interest can make a little investment into a big one. For instance, a person who saves $50 per month with a 6% return starting at age 25 will have over $150,000, while someone who saves $75 per month starting at age 35 will only have about $101,000.
Use Employer Benefits
It’s important to utilize employer-sponsored programs, whether it’s a matching contribution, Roth IRA or 401k. There are tremendous benefits to these programs, and if an employer offers contribution matching, the worker should max them out. 401k contributions are pre-tax, which makes it easier to budget for monthly retirement investing.
Use Bonuses and Raises Wisely
This part takes discipline, but it’s worthwhile. When a worker receives a bonus or raise, they should consider investing at least part in retirement. When an employee receives a raise, they should increase monthly savings by a corresponding amount to keep the retirement fund on track.
Review the Plan Regularly
Because time is limited, it is important to review one’s retirement plan regularly. By periodically reviewing a plan at various stages in one’s career, a worker can be prepared when it’s time for retirement. Small changes early on can make a substantial difference in the long term.
Pay Into the Retirement Fund First
One of the most crucial parts of retirement planning is for the worker to pay themselves first. By putting money into the retirement fund first, the worker will find it easier to budget for it when the time comes. It’s simple to automate the process by setting up an automatic transfer in an online bank account.
Financial advisers are there to help clients achieve greater retirement planning success. With proper planning, a person can have an easier, more fruitful retirement.