Retirement is a word that people don’t think about when they’re younger. It’s too far off. Unfortunately, many people haven’t planned enough ahead for retirement. Are you on track for retirement? If not, here are a few tips to help you get back on track for retirement.
What Retirement Will Look Like
Before you can plan for retirement, you need to consider what you will be doing when you retire. What kind of activities will you be doing? What’s the cost?
Along with these questions, you need to consider your living expenses. You want to create a list of possible expenses. Then, create a budget. By the way, experts say most people need 80% of their current income for retirement.
Consider Your Assets
Once you’ve figured out how much you’ll need, take a look at your current assets. How much do you already have saved up? Knowing this will help you determine if you’re on track.
According to CNBC, you should have:
- 1x your income at 30
- 3X your income at 40
- 6X your income at 50
- 8X your income at 60
If you’re off track, then you’ll need to make some adjustments to your current lifestyle to make up the difference.
Create a Plan
Next, you need to create a plan to get your savings up to where they should be. What current expenses can you cut? Basically, the goal is to funnel more money into your savings. Once it’s in your savings, don’t touch it for any reason. This may require downsizing your current lifestyle. Remember, you’re investing in your future.
Choose the Right Tax-Advantaged Account
Picking the right account to hold your savings is important. If you have access to 401(k), go with that. Otherwise, you might want to look into a Roth IRA. Preparing for retirement is all about knowing where you want to be, where you stand now, and how to get from where you stand to where you want to be.
Retirement takes planning. Starting sooner will help you be prepared for that someday that will be here sooner than you think.