In recent years, you’ve probably heard a lot of discussion around retirement and how difficult it’s going to be for many people to achieve it. By getting a head start and following some of these tips, you may be able to spend a large portion of your life doing whatever it is you want to do, rather than sitting in an office.
1. Consider Workplace Plans
Most employers today will have a retirement plan in place that you could be contributing to, or contributing more to. Whether you need to move an old 401(k) to your new employer or start contributing to the new plan, don’t be afraid to ask how much your company is willing to match for contributions. You might be surprised at how much you can put in every month. Then, you can start contributing around 10% more every six months or so.
If possible, talk to your HR department about setting up automatic increases that will also be matched. That way, the longer you work for your current company, the more you’ll be saving over time. However, if your current employer does not offer any retirement savings options, you should speak with a financial adviser about setting one up for yourself. Saving for retirement becomes a much easier and faster process if you have the right plan.
2. Evaluate Your Priorities
Now is the right time to sit down and decide what you want your life to look like and what’s important to you. Many people take for granted that you’ll want to spend your younger years doing things like traveling and having (potentially expensive) experiences, such as large weddings. While doing things this way works for some, a lot of people reach their older years and realize that they’d prefer to have more free time in retirement, rather than spending all their savings early on.
It can be hard to save for a life that’s many years in the future, but if that’s what you want to do, you need to prioritize it. Of course, there’s no reason why you can’t still have fun and do what you enjoy now, you just need to make sure it fits within your long-term financial plan. That way you can plan vacations and have adventures with the knowledge that you aren’t disrupting your future.
3. Address Debt
If you have any debt, it’s time to turn your attention to it and create a plan for paying it off as soon as possible. Having lingering debt can be seriously detrimental to a retirement plan, especially if there’s compounding interest. You should be looking at interest as an avoidable cost, and when saving for retirement, avoidable costs should be, well, avoided. Debt can be scary and it can be tough to take an objective view when you owe a lot of money, but doing it now is undeniably the best time to do it.
4. Begin Investing
For those with the assets to afford a financial advisor, you’ll receive encouragement to invest early and often. Thankfully, investing has become increasingly easier for the average person to participate in. It doesn’t have to be time consuming or risky. Many investments can be a safe and near-guaranteed way to maximize your assets and gain some passive income. If you ask anyone who retires early what their secret is, they are most likely going to tell you it was all down to investing.
5. Get a Second Stream of Income
Lastly, if you want to fast-track your retirement process or have concerns about reaching your goals on your current income, you can always take on a side-gig to create a second income stream. Something that isn’t super time-consuming or stressful, such as freelance work or a barista job, can be a sustainable way to bulk up your bank account in a short amount of time. You can use a second job as a short-term plan to reach a specific benchmark in your long-term retirement plan. Just remember: retirement isn’t impossible, and many people are finding ways to save up today so they can retire early and enjoy their savings confidently.
