While retirement may not be top of mind while you’re young, prioritizing saving early in life can help you enjoy the retirement you deserve. We’re sharing a few simple ways to save for retirement, broken down by age.
Benefits of planning for retirement early
Following a roadmap to retirement will help you get the most out of your money so you can spend your retirement years making memories instead of stressing over finances.
The earlier you begin saving for retirement, the more money you’ll be able to accumulate through tax-advantaged accounts, investments, and savings.
While most of us will choose the standard employer-sponsored accounts throughout our careers, having a more robust retirement plan during your early years, such as an annuity or a cash value life insurance policy, can make all the difference when you reach retirement.
Retirement planning in your 20’s
When you’re just starting out in your career, it’s important to have a savings plan in place. In your 20’s and 30’s, you will want to set a retirement roadmap that can evolve over the years while keeping you on track as your salary grows.
To begin, you’ll want to map out what your ideal retirement looks like. While we don’t know what prices or the market will look like in the future, we can plan for higher expenses on most items on our budget and save more than we initially believe may be necessary.
Plan for higher costs when listing retirement expenses such as a mortgage, health care, travel, and daily living expenses. Next, you’ll want to calculate any income you will receive during retirement, including Social Security, 401k’s, or other retirement savings accounts.
Once you have an estimate of your monthly and annual expenses in retirement, you can set a savings goal to reach by retirement age (generally around age 65).
Many advisors recommend saving an estimate of 10x your preretirement income by age 65 to maintain your current lifestyle during your retirement years – this could be broken down to saving an amount equal to (or double) your annual income by age 30, three times your income by age 40, six times by age 50, and so on.
Retirement planning in your 30’s
Once you have your retirement plan in place and you are working on your savings goals, you may consider purchasing a financial vehicle to help you reach those goals.
An annuity is a time-tested solution for retirement savings, as it allows you to save money tax-deferred over the years and receive a guaranteed income stream during retirement. An annuity can be a very beneficial savings vehicle beyond your standard 401k and IRA by protecting your income from market loss, as its value doesn’t sway with the markets.
With an annuity, you won’t have to withdraw a specific amount each year as you would with an IRA, and you won’t have to face the risk of market loss in the event of an economic downturn.
Planning in your 40’s and 50’s
When you enter your 40’s and 50’s, you likely have a solid plan in action for retirement. During these years, it’s important to focus on keeping up with your goals. This can include making catch-up contributions to your retirement accounts, continuing to stick to your budget, and meeting with your financial advisors and insurance agents to ensure you’re making all the right financial decisions.
You may also find opportunities to maximize income through side jobs and find ways to minimize unnecessary expenses during this time.
Many people are delaying retirement and working longer than ever before. Depending on if you’re delaying retirement or ready to begin your adventure, the years before your scheduled retirement are key to ensuring you get the retirement you deserve.
Delaying your retirement deadline by a few years could significantly improve your retirement benefits; If you anticipate receiving Social Security benefits, the monthly payments you receive will vary based on when you start receiving them. If you delay retirement up to age 70, your benefit amount will increase.
You’ve reached your retirement years, now what? It’s important to protect the wealth you’ve worked so hard to build, and meeting with a financial advisor can help you ensure your finances are prepared for retirement.
Now is a good time to meet with your insurance advisor to ensure your life insurance beneficiary information in your policy is accurate and to discuss how you can make the most of your policy benefits during retirement.
If you have an annuity for guaranteed income in retirement, you can begin receiving payouts to supplement retirement living. Funds from your annuity can be used to fund a vacation, cover medical expenses, provide for daily expenses, and more.