We all dream of a day when we can comfortably retire. But, how do we make sure we have adequate funds set aside, so that we can do so on our terms? In order to reduce stress levels down the line, it is important that we all start saving for retirement as soon as we can.
You may wonder if there a deadline you need to start saving by. The general answer is no. When and how we build our retirement saving will vary for each individual. But in general, the rule is, “as soon as possible!” One reason is so we can receive the most benefit as possible from the interest growing our savings.
In order to figure out your ideal retirement saving timeframe, follow these three steps:
Estimate Your Nest Egg: No two retirement funds are the same. Get an accurate sense of your retirement savings goal by assessing the cost of living in your preferred retirement location. It is very important to take future inflation into account when calculating this figure. Most people anticipate a 20-year retirement, but make sure that you plan for longevity so that you don’t outlive your money!
Map Out Different Timeframes: Once you know how much you would like to put away for retirement, look at your current saving power. Get a sense of how much you can put aside monthly toward retirement, and then calculate how many years, at that rate, it will take you to reach your end goal. Another good test is to project retirement figures based on starting at various ages, such as 30, 40, and 50 years old. For example, what will saving a set amount, starting at 30 years old, look like for you after 35 years? Next, calculate what regular saving will get you, if you start saving at 40. Then, at 50. The vast difference in the monthly savings amounts required, when your timeframe is compressed, will be a good motivator for you to increase the amount you can save as soon as possible!
Secure Your Savings: Emergencies can happen before your retirement that may slow or stop your ability to set aside money for your retirement goals. This is why it is important to push yourself to maintain an emergency fund as you save for retirement, in order to avoid suddenly derailing your savings progress. You may also want to consider an appropriate combination of insurance policies to help maintain your financial security before retirement, and then adjust your insurance policies to better serve and protect you during retirement.
If you want to increase the growth rate of your retirement nest egg, generally, you have three options: overhaul your budget to cut your daily spending, increase your income, or both. Many people find that by adding a second career to their plate, they are able to get themselves secure and on-track for their retirement plans.
Want more information about retirement? Visit the Syncis blog at www.syncis.com/blog/.