By Ryan Laspina
Senior Specialist, Red Flags and External Reviews at APUS
Retirement was once though of as planning for those who were ready to settle down to a life of leisure after finishing a long career, right? Wrong. That line of thinking could not be further from the truth. The average American will not be able to retire until they reach their mid-60’s, you should start thinking about retirement as soon as you enter the work force. Proper planning is critical to actually being able to enjoy the benefits that retirement has to offer. Just like any other major financial decision, planning for retirement takes budgeting, sacrifices, and forward thinking. Below are some of the best ways to plan for retirement.
- If your employer offers a 401K plan, put money into it. Every employer is different, but most employers will at least match some of your contribution to the 401K. A 401K is a great way to store money for use during retirement. It does cause your paychecks to be a lower amount every pay period, but that money will be stored for future use. Unless you are in desperate need of extra money, you should not touch the money in your 401K account until you are ready to retire.
- If you have extra money, create a savings account for retirement purposes. There are probably other, more selfless reasons to create a savings account (child’s college fund, etc.), but if you are in the position where those costs are not applicable, putting extra money away for yourself is a great way to ensure retirement becomes a possibility.
- Never solely rely on social security. Depending on the economy and the direction our government goes in, social security may not even be an option 40 or 50 years down the road. For younger people, saying you will rely on these benefits to pay for your living costs during retirement is foolish. Truthfully, social security alone does not pay you enough to live a comfortable life during retirement, so having numerous income streams is advisable.
- Think about your own health and mortality. This may sound morbid, but you have to try to prepare for how long you could potentially live in retirement. If you retire at the age of 65, it is not inconceivable that you could live another 20 years or more. Will you have enough income and/or savings to last 20-plus years? Those are the type of questions you should think about even in your younger years.
While retirement usually occurs during the twilight of someone’s life, it is a life-long planning process to make sure you are taken care of during those years. Retirement is something you should start thinking about today if you have not already taken it into consideration. The retirement years should be filled with leisure, so make sure they can be by doing proper budgeting and planning as early as possible.