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f you’re at all interested in how to manage your money, one of your biggest concerns is probably retirement. And if you aren’t thinking about it right now, you should be!
Most people would like to stop working one day so they can enjoy their later years. Even for people who like to keep busy, there’s a chance they could have no choice in whether they keep working as they get older.
Once you’re no longer working, you want to know that you can be financially comfortable. You might not be swimming in cash when you’re retired, but you can have enough to make your retirement something to look forward to.
But when and how should you save and invest for your retirement?
When Should You Start Saving for Retirement?
However, if you’ve left it until later to start preparing, it’s not too late. Some people might have more of a head-start, but you can still begin putting away money for retirement at any time.
Even if your retirement years are 20 or just 10 years away, there’s time to do something.
How to Prepare for Retirement In Your 20s
Most people get their first full-time job while in their 20s, or perhaps a little earlier. At this point, you’re not likely to be thinking about retirement a lot.
In your early 20s, especially, retirement can seem so far away. Putting money away for it might seem pointless when you need it now to help you get started in adulthood.
You’re probably more concerned with paying rent and buying groceries, or maybe shorter-term goals like buying a home.
But it’s never too early to start saving and investing for retirement. Your 20s can be a good time to begin, and you don’t have to save a lot.
Just saving a little each month will help you get started. But it could also be a good time to save a bit more aggressively, especially if you don’t have any other financial obligations just yet.
Plus, with compounding interest if you start saving for retirement in you 20s, you will end up with a MUCH bigger nest egg when it comes time to retire.
If your employer offers retirement savings options, exploring them is a good idea. Now could be a good time to get an IRA or another retirement account.
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Saving for Retirement In Your 30s
By the time people are in their 30s, many have or are starting families. This means that you’re likely to be thinking more about your current situation than your retirement.
But it’s still important to keep saving and investing. Now might be the time when you want to explore different types of investments and ensure you’ve set financial goals.
Balancing your long-term retirement goals with short-term and medium-term goals is important. You might have goals to buy a home, put your children through school, or move somewhere new.
Some investment advice will suggest that you should have a certain amount saved at different points in your life.
For example, some say that by the time you’re 30, you should have the equivalent of a year’s salary saved for retirement.
However, these guidelines aren’t necessarily useful for everyone. Setting goals can help, but it’s important that they’re useful for you.
In Your 40s
Something that you might want to do while in your 40s is start to diversify your retirement investments.
You’re probably only about half-way through your working life, so there’s still plenty of time to explore your options.
As well as having retirement accounts for saving and investing, you can look at a range of investment options that might help you reach your goals. Maybe you’ll want to consider investing in gold as a way to diversify your portfolio.
You could look at different ways to invest in stocks and bonds, or explore something more unusual like investing in art or wine. Did you know you can even invest in farmland on Farm Together?
Make sure you check your progress and compare it against your goals. You might even change your goals at this point in your career as your priorities change.
One of the top recommendations is to start allocating some of your investment portfolio to stocks in your 40s and maybe start adding bonds as you start to get older too.
Using a taxable account in addition to your retirement accounts can be a good idea too, giving you more flexibility with some of your money.
Retirement Preparation In Your 50s
In your 50s, you may be reaching the point of being an empty nester if you have a family. Your goals and priorities might be changing, but retirement is also getting a lot closer.
Still, you could be working for another 10-15 years, or even longer. You might still be supporting children in various ways, and you could be helping out elderly parents too.
Even if you haven’t done a lot to save for retirement by your 50s, it’s not too late to start saving and investing. You can still picture your retirement, set goals and try to catch up on some of the savings you’ve missed.
If you’re already in a good position with your retirement savings, it might be tempting to keep doing what you’re doing.
But it’s a good time to take a look at where your savings and investments are and ensure they still match your goals. It’s also important to check what fees you’re paying and ensure you’re not losing too much money to them.
Retirement Saving In Your 60s
Most people hope to retire in their 60s or at least not long after them. Once you hit your 60s, taking a good look at your current position is important.
Are you close to your goals? Do you need to do anything differently to be prepared for retirement? What could your retirement look like with what you have?
There’s still time to save and keep investing, even if you feel like you’re not exactly on track. You will most likely want to become more conservative with your investment portfolio, reducing risk to help you ensure a comfortable retirement.
Frequently Asked Questions
What is a Good Monthly Retirement income?
How much you need. to retire comfortably depends somewhat on what you want retirement to look like and also what you are used to having as an income now.
The general rule of thumb is that you should try to have 80% of your current income when you retire.
So, if you make $100,000, you should try. to ensure that you have $80,000 of yearly income when you retire.
And it isn’t just about how much money you have in. a savings account either. It is best to have actual income. So, maybe you have rental properties or other passive income streams.
When Should I start Saving for Retirement?
As soon as you can! The earlier you start saving, the more money you will have for retirement. Try as hard as you can to find $100 or more at least every month to save even in your 20s.
What is the $1,000 a Month Rule for Retirement?
The $1,000 a month rule is that for every $1,000 income per month that you want in retirement, you need to save $240,000.
It is best if you can start saving money for retirement as soon as start generating income. The more time you have to contribute to retirement, the more money you will have when you do retire.
But, if you have started later than you meant to, you can still catch up! It is never too late to start saving for retirement.
Your approach to retirement saving can change as you get older and so can your goals. Keep regularly checking in with where you are and what you want to be as prepared as possible.