Although it sounds like a cliché, the old adage “It’s never too early to start planning for your retirement” definitely rings true. Times have changed, and unlike previous generations, there is no guarantee of an employer-provided pension these days. We are also living longer than previous generations, so responsible retirement planning is a must. Taking control of your finances and adequately preparing for retirement also ensures peace of mind, which is something everyone can benefit from in these stressful times. Knowing that you will not outlive your income will allow you to enjoy your retirement without having the sacrifice your quality of life.
The Benefits of Planning Ahead
The most daunting part of planning for your retirement is usually knowing where to start, but it is easier than you might think. Creating a budget and sticking to it is a valuable first step because spending less money than what you earn will allow you to set cash aside for retirement. Paying off credit card debt as quickly as possible is also highly recommended because of the amount you can shave off the interest payments. High interest debts should be your top priority, as they will net you the biggest savings when paid off quickly. Depending on your workplace savings plan, your employer might offer matching contributions, so take advantage of this if available. According to CNN Money, it is best to start saving as early as possible in order to take advantage of compounding.
Avoid The Pitfalls
A common pitfall among people who retire is claiming their social security too early, which can result in dramatically lower monthly checks. By simply waiting longer, you can benefit from bigger monthly checks, which outweighs the benefits of cashing in earlier. This is especially important if you plan on traveling more after retiring. as it would mean that there is no guarantee your spending is going to decrease. Forbes reported that it is common for Americans to underestimate their life expectancies, which obviously has a detrimental effect on their retirement planning.
The one advantage that we have today compared to previous generations is the ability to easily access information and resources online to aid in planning. There are numerous websites dedicated to Retirement planning that contains practical assistance for dealing with this daunting subject. The bottom line is that there really is no excuse for remaining ignorant about the topic considering what a huge impact it will have on your life.
By being responsible and planning properly, you will be able to attain the goal of financial independence after retirement instead of having to rely on your children for support. This will not only provide you with a better quality of life, but also decrease the amount of stress you have to deal with leading up to retirement. Nobody wants to engage in a mad scramble for cash at the last minute in order to retire, which means that the sooner you get started, the better.