When you’re younger, it can be easy to put off any thoughts of retirement planning at all. It can seem so far away as to be irrelevant, or maybe you assume that you’ll never do so in the first place. However, failing to plan can have serious repercussions as you get older. Thinking about it as integrated into the rest of your life can help you better prepare for this as a fulfilling time.
How to Think About Retirement
There are a couple of common mistakes people fall into when doing this kind of planning. One is that they put off everything that they genuinely want to do in life. The problem with this approach is that there are no guarantees, and your own health or that of a loved one might be failing by this time. The other mistake others make is thinking of this time as walled off from the rest of their life.
Approaching this time may seem undesirable, as though you are suddenly going to turn into someone who no longer has any particular goals or interests and who is simply biding their time. There is no reason this has to be the case. This can be a vital, exciting extension of everything you have built throughout your life, and approaching it that way can give you more enthusiasm and inspiration for planning what you’ll do in these years.
Saving Money
Everyone needs to save money for retirement, either in an employer-sponsored account or one that you set up yourself. If you’re young, the good news is that even small amounts saved will grow enormously thanks to compound interest. If you’re older, the good news is that you can increase your contributions in your 50s. One obstacle you may face when you’re younger is freeing up money to put away in the first place. Even if you know that money you place in these accounts now can make you a millionaire in a few decades, it can be hard to delay gratification or find ways to reduce your bills.
However, there are a few things you can try. Utilizing NaviRefi student loan refinancing can help you reduce what you are paying each month in student loan debt. This can free up some cash to put toward retirement. If you live alone, you may want to consider getting a roommate. Tracking your spending and making a budget can help you better understand where your money is going and where you can cut back.
Diversify Investments
One thing people often misunderstand about saving for when they are no longer working outside the home is that they don’t have to put all those savings into a single account. Some may be anxious because they don’t trust the stock market or they are worried about an employer pension plan, but you can distribute your money across a number of different vehicles. It’s also important to keep in mind that over the long run, investments in stock tend to grow in value even when there are short-term dips.
You can talk to a financial professional about the best ways to invest your money based on your goals. You can also opt for a robo-advisor with a brokerage account and use that to help you choose among many different options. Another thing to be careful about is borrowing against your retirement account. There are times when this might be a necessary option for you, but if it does, be sure to thoroughly research it so that you’re well-informed about the risks and alternatives.
Stay Flexible
Flexibility is key when it comes to retirement planning. What you imagine it will be like might change several times over the course of your lifetime, and you should never feel beholden to an earlier self’s version of what you’ll do in these years. There are a number of different paths you can take when you retire. Setting goals can help you retain a sense of purpose, which can be particularly important if you worked at a high-pressure position where you were accustomed to always striving for something. Some people use retirement as a time to pursue the career that they really wanted to do but found impractical when they were younger.
Others might start their own business while still others might throw themselves fully into pursuing certain hobbies. Getting a college degree, travel and moving abroad are other options that retirees often enjoy. Essentially, these years can be very different from stereotypes you may imagine about slowing down. If you start thinking in your 20s about how you’d like retirement to look, you can make these years a rewarding culmination of a lifetime of experience and interests. At the same time, you should remain flexible because your goals and desires will almost certainly change over the decades. Be honest with yourself about what you want from these years, and don’t be afraid to shift gears as you age.