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Start Planning for Retirement Today and Thank Yourself Tomorrow

Relying on your benefits is not nearly enough to fund a comfortable retirement. Here are a few ways you can take some first steps toward securing your financial well-being in the future.

Planning for retirement is an important task that many people avoid. In some cases, it’s because you might feel that you can’t spare any of your income to invest in your retirement. Other times, you might simply be pushing it off. You have plenty of time, so why worry about it now?

However, the longer you delay planning for your retirement, the less money you’ll have to support yourself when you can no longer work. Instead, you’ll have to rely on government benefits, which have an uncertain future.

Starting to invest in your retirement now, no matter how little you’re able to spare, will help you be prepared for what the future has in store.

There a few reasons you should consider planning for retirement as soon as possible.

Security

Many people stress about money. But, when you’re young, you at least have the ability to look for new work and increase your income.

In retirement, working may not be an option. Medical issues may prevent you from doing any work at all. Even if you are physically fit enough to work, you may not want to exit retirement and rejoin the workforce.

Saving your spare income now has its immediate benefits, but investing in your future will help you live comfortably as you age.

Early Retirement

Spending less and investing more in a retirement plan will greatly increase your chances of gaining financial independence at an earlier age.

According to a 2018 Gallup survey, the average American expects to be able to retire at 66.  If you plan on applying for benefits, the earliest age you can receive them is 62.

In order to reach financial independence by these ages, or even earlier, it’s imperative that you find ways to save money now.

Be Prepared for Unforeseen Expenses

Not everyone realizes how expensive retirement can be. It’s not as simple as calculating your basic living expenses and luxuries.

As you enter retirement age, you’ll likely begin experiencing more medical issues — causing increased medical expenses. Supporting your basic needs plus your medical needs can be a huge burden if you aren’t prepared.

This can be particularly difficult if your retirement plan depends on benefits that you cannot control. Creating a retirement plan early will help you finance your future healthcare needs.

How to Start Saving Early

You might already be aware of the benefits of creating a retirement plan early, but maybe you haven’t started because you don’t think you can spare the extra income.  The fact is there are several ways to invest in a retirement plan without sacrificing too much of your income.

Contribute to a 401(k) and Roth IRA

One of the keys to successful retirement planning is investing. If you begin planning early, you don’t need immediate returns. Instead, you can rely on the reliable returns offered by 401(k)s and Roth IRAs.

Every 401(k) is different, as it entirely depends on the investment portfolio that you set up. However, a 5 to 8 percent annual return is a fair expectation.

Many employers offer to match your retirement contributions, which can provide an extra boost to your retirement savings.

Track Your Expenses

One of the best ways to identify opportunities to save money is to track your spending.

You can use an app like Mint to link your spending accounts and see exactly how much you spend on different categories. Use this information to determine how you can stop overspending on unnecessary purchases.

If you are unable to plan for retirement due to a lack of additional income, tracking your expenses is a great way to find that extra money.

Pay Down Your Debts

If excessive debt is restricting you from investing in your future, it’s time to take control of your finances.

Tackling debt isn’t easy, but it can be done. Consider using the snowball method in which you pay off your debts from smallest to largest. This can make it easier to handle and will reduce the stress of determining how to allocate your money.

You should also be sure to create a budget and make retirement contributions one of your necessary expenses. An app like You Need a Budget can help you learn how to responsibly plan your expenses — even if your budget is limited.

If you have multiple outstanding debts and it’s becoming difficult to keep track of them, it could be a great idea to use a balance transfer credit card to consolidate your debts to one place. By doing so, you will be able to clearly account for all of the money you owe while understanding how much you can put away toward retirement.

Planning is an incredibly important task that too many people ignore. If you start saving now, you’ll be grateful that you did when the day comes for you to leave the workforce.

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