Most advice you hear about retirement will tell you to start planning yesterday – as soon as you enter the workforce full-time, you should be planning and saving for retirement. This means setting money aside, ensuring your employer matches your 401k contributions, creating an investment portfolio, and, most importantly, having a vision for your eventual retirement.
Unfortunately, many people don’t have the luxury of planning for retirement young, while others lack the foresight. But if you didn’t start planning, it’s not too late! Here are a few things you can do right now to prepare for retirement.
Start Now!
If you’re reading this article, there’s a good chance you’re considering retiring and know you haven’t done everything you can to prepare yourself. The most important thing you can do is start planning right now! That’s right, you need to be thinking about it as you read this article – being a few years (or even decades) behind your peers in terms of retirement savings can be daunting, but the longer you wait, the further behind you’ll be, so start saving and planning right now.
The first thing you’ll need to do is look at your expenses and current income: how much does it cost to live the life you’re currently living? Once you have these details figured out, you can start projecting your financial needs in the future. Remember that your medical expenses will likely increase as you age, and inflation should also be accounted for when you start saving.
This number should give you a target to aim for, so you should next assess your current savings, the income generated from your investments, and what your employer is willing to match up to see how much you’ll be able to save before retirement.
Save in a High-Return Account
People start saving young because of a little thing called compound interest – their money will make money just for existing over the years. If you don’t have the luxury of decades to save, investing your money in a TFSA or another high-interest saving account like a Roth IRA will help you quickly turn your savings into a bigger nest egg.
Take Advantage of Tax Credits
You can get a jump start on your savings by taking advantage of tax credits you may not have known you were eligible for!
Make Higher-Risk Investments
If you haven’t saved enough for retirement, you may be tempted to invest in high-risk options. But is it worth the risk?
If you’re not sure if you’ll ever be able to retire, it’s a good idea to do what you can now—investing in high-risk options can help make your retirement more comfortable, but only if you have the right amount of money set aside.
Here’s how it works: Take your regular investment amount and allocate it to a higher-risk stock, putting any return on investment into retirement. The assets will carry you through retirement, so it’s important to get some early.
Talk to a Professional
If you haven’t started saving or are looking for more specific ways to reach your targets, talk to a financial advisor. They can help you estimate exactly what your savings goal should be and give you a plan of action to help you get there in the timeframe that works best for you.
If there’s one piece of advice we can give you, it’s this: don’t ever think it’s too late to start saving or planning for retirement. Everything you do counts, and it all matters!
To help you get started, we recommend talking to Hometown Financial Group and how we can help you save for retirement, including retirement insurance and other insurance plans that can help you as you age.