Whether you’re paying off debt or starting with a clean slate, getting started on saving for a comfortable retirement is possible but not without focus and some sacrifices. Although it can be daunting and overwhelming, a retirement planning process is a necessary task if you want an enjoyable lifestyle throughout your senior years. What you do now spells mostly what you will achieve later in terms of your retirement goals. Here are a few tips to get retirement planning started.
Starting with A Clean Slate
If you don’t have any substantial debt but don’t have much to show for in terms of savings, just roll up your sleeves and get busy. Compute first how much you need for retirement. This largely depends on personal lifestyle and spending habits but there are some basic guidelines to consider. People typically retire at age 63 and live up to age 85 so planning for enough money to last you 22 years is the minimum number you should be planning for. Consider the cost of living and medical expenses required to last you 22 years. You don’t need to have the exact figure; a ball park estimate will do. Next consider your pension options, whether state or private pensions. Evaluate if your expected pension covers the amount you require to live on monthly and save up for the balance. As you get into the habit of setting aside a portion of your income for retirement, increase your savings rate to allow for luxuries like travel and entertainment.
Starting with Debt
What if you’re starting off with some debt like student loans or mortgages on a house? Do you prioritize paying and eliminating debt before saving for retirement? Experts say it makes more sense to do both at the same time. But do evaluate the type of debt you carry. If you have any high interest debts, prioritize paying that. You can leave some lower cost debt while you work on saving for retirement. You can consider getting on a debt management program to lower the costs of your debt or restructure for more manageable payment terms to allow you to make room for retirement savings. Companies like Debt Helpline are places that people who are looking to consolidate dates turn to. These companies can alleviate heavy-debts and make it easier to save.
Retirement may seem like an eternity away but starting early and taking action now will determine how well you will enjoy your retirement years. Try out these preliminary tips to get you started down the road to retirement success.