Even though there are several important financial events in your life, your retirement is the single most important financial step in your life. Preparing for this event shouldn’t start a few years before it happens.
Why is planning for retirement the single most important financial step?
For many people, retirement will last 20 or more years and therefore requires a significant amount of savings to fund your retirement. Saving this amount of money requires a significant amount of time so retirement planning needs to always be a priority even at a very early age.
When should people start planning for retirement?
In reality, retirement planning needs to start the moment that people start working. Whether you have access to a 401k or some other workplace retirement savings plan or not, you can start saving even a little for your retirement. The earlier you start the less painful it will be later in life because time is the most valuable resource for building a retirement nest egg.
Besides starting early, what are other important retirement moves to make?
It is vital to make smart investment choices with your retirement funds, you don’t want to be too conservative or too aggressive. Either choice will significantly impact your overall return, and therefore, how much you have saved at retirement. You should also consider your health and try to live a healthy lifestyle to avoid health concerns in your retirement years. The two moves can be the biggest contributors to your retirement lifestyle.
What money habits can help support your retirement efforts?
It starts with living within your means to avoid building debt. Learning to comparison shop on every purchase will help you find additional funds for retirement savings. Probably the most important habit of all is to develop financial plans and goals and regularly revisit them to ensure you are on track.
What are mistakes to avoid in reaching your retirement goals?
The top five mistakes to avoid are:
- Not reaching the company match as soon as possible
- Borrowing against your 401k
- Putting education savings ahead of retirement savings
- Failing to reach the catchup contribution amount once you turn 50
- Starting your retirement too soon