“When should I begin seriously thinking about my retirement?”
Whenever we hear this question, we’re reminded of an old Chinese proverb: The best time to plant a tree is 20 years ago; the second best time to plant a tree is today.
The same principle holds true for retirement planning. It’s better to begin saving at a young age, but if that wasn’t an option or saving for retirement was put on the backburner in your youth, today is a great time to think about retirement with renewed vigor.
With that in mind, here are a few things you can begin thinking about today to strengthen your financial plan and begin saving for retirement no matter what your age is.
Your 20s: Save Consistently
Saving for retirement isn’t something that many in their 20s have room for in their budgets. It’s something we empathize with, but saving even a small amount can really add up over time. If you’re currently 25, saving just $10 a week on an investment that earns a hypothetical 5 percent rate of return would grow to about $60,000 when you’re 65. Waiting just five years to begin saving would leave you with only $45,000 when you turn 65.
Your 30s: Plan for Your Family
Increasingly, couples are delaying having children into their 30s. Once you have children, you’ll want to review your insurance coverage. This means looking at the amount of disability coverage you have or purchasing life insurance. If saving for college is one of your goals, look into saving in a 529 plan or other college savings vehicle while your children are still young.
Your 40s: Solidify Your Estate Plan
Once you’re in your 40s, it’s important to have an established estate plan. Your career is more likely to be settled, you may have purchased a home or have begun putting money away for retirement, and you’ll want to have a plan in case anything happens to you or your spouse. And your estate plan may involve more than just a will—you may also want to establish a trust for your children and review that your beneficiary designations on life insurance and retirement accounts are correct.
Your 50s: Have a Long-Term Care Plan
This decade is a good time to engage in long-term care planning. If your plan is to purchase insurance—both of us have LTC insurance—you may want to shop for one during your 50s. Waiting until you get older could mean either the premiums will become unaffordable or you may develop a medical condition, thereby making you ineligible to purchase a policy. And if your LTC plan is to have your children help you out, make sure you talk with them to confirm that they’re willing and able to serve as your caregiver.
Your 60s: Decide When to Claim Social Security
Most people will claim their Social Security benefits between the ages of 62-69, although you can delay benefits until age 70. It’s an important decision since once you begin receiving benefits, the decision is hard to reverse. The decision is essentially a trade-off between having a smaller monthly benefit that you receive for a greater number of years versus a larger benefit you receive for a shorter amount of time. Which age is right for you depends on a number of factors that are unique to you and your family. A financial adviser may be able to provide guidance to help you make this decision.
No matter how old or young you are, there are always things you can be doing right now to strengthen your financial plans. And if you didn’t start saving for retirement when you were younger, don’t feel guilty—just be ready to take action today.
by Bruce Helmer and Peg Webb | Aug 26, 2016
Authors: Bruce Helmer and Peg Webb
Source: Brainerd Dispatchand Forum Communications Company
Retrieved from: www.brainerddispatch.com