How to Plan for Retirement at Any Stage of Life

Retirement is a lifelong investment that ideally begins at the start of your career. However, it is never too early or too late to start planning and saving at any age, no matter what your circumstances are or the status of your financial situation.

The first step in saving towards your retirement dreams is to become financially literate about retirement saving strategies.Then choose a plan that best suits your goals and get started. While there are different ways to approach retirement planning for each milestone of your career, you can and should start saving as soon as possible.

Here are our retirement saving strategies in your 20’s, 30’s 40’s and 50’s that can lead you to the retirement path of your dreams.

Retirement planning in your 20’s
Time is on your side:

The long road to retirement works in your favor as you can contribute less money per pay check or month over a longer period of time when you are young. This way you can ideally save more money than someone who contributed more money over a shorter time frame. As a twenty-something, aim to save 10% of your income and look to increase that percentage as you earn more money. Consider different retirement options depending on your circumstances and find the right plan for you to start out.

Say yes to the match!:

Be familiar with what your company offers and find out if the retirement plan offers a company match! Even if you contribute the minimum each pay period, you will be getting extra money towards your retirement! Make sure when signing up for any company-run plan that you know the terms and talk to the plan’s representative to find out the best investment option for you! In addition to putting money away into a 401(k) plan, consider opening a Roth IRA to put additional savings in. As a young worker in a lower tax bracket, it’s in your interest to contribute to a Roth IRA since contributions are made after taxes.

Pay down debt:

Limit credit card usage and focus on paying off debt first. At your age, try to maintain less than a 20% credit utilization rate, which is your available credit to debt ratio. Paying off debt early, especially student loans, can help you allocate more money for retirement later on, reduce your debt to income ratio and increase credit worthiness to show you have been paying and reducing debt!

Retirement planning in your 30’s
Beef up your retirement contributions:

At this point in your life, you may have a mortgage or children (or children on the way), which may make it harder to save for retirement given your expenses. If you are settled into your career, look to gradually increase your retirement contributions each year. By slowly increasing your monthly contributions, even by a few dollars each month, this will ease the stress of having less take home pay. Aim to eventually save 15% of your monthly income towards retirement. Don’t be tempted to borrow from retirement for housing or other debt related expenses. Consider your retirement money to be untouchable.

Consider your retirement plan options if you have a change in employer and how it affects your retirement fund or 401(k):

For example if you have a 401(k) with a job you are leaving, consider transferring those funds into an IRA rather than cash out a 401(k) and pay a 10% penalty if you are under 59.5 years of age. Consult the company’s retirement plan supervisor to make sure you transfer the savings without a penalty.

Retirement comes before your children’s college:

It’s never too early to start saving for your children’s college education, but it should not be at the expense of saving for retirement. Grants, scholarships, and loans are always available for students, while no such options exist for retirement savings. If possible, actively save for both, but make sure retirement is the priority. Yes, everyone wants to put money away for college but consider that paying off your home, building retirement, and reducing debt can all place you in a position to help pay for college more easily.

Retirement planning in your 40’s
Make sure you are contributing as much as possible:

Your forties are your peak earning years and you should be well on your way to reaching your long term savings goals. If you have been diligently saving for the past 15-20 years, you should already be comfortably putting away 10% of your salary into retirement. If you have waited longer to start saving for retirement you will need to contribute more money each paycheck or month to make up for lost time.

Find out if you are on track:

To figure out if you’re on track to successfully retire at your goal age, take a look at a retirement planning calculator to determine how much more you need to save to reach your target number. To save more for retirement you might have to make some tough choices regarding your expenses and lifestyle. Take a long hard look at what is worth having now versus saving up for the future. The biggest mistake you can make is using your retirement fund like an ATM. Again, it’s money for later and should not be touched.

Retirement planning in your 50’s and beyond
Can you even start saving at this age?:

Yes it is possible! It’s not too late unless you think it is. To save for retirement at this point, you may need to save upwards of 20% of your gross income. Even someone in their 50’s can take advantage of time as if you were in your 20’s. You still have an opportunity to get a return on your investment even in your 50’s. Considering that retirement can be more than 20 years away, you have plenty of time to save enough to live comfortably.

Remember, retirement is about you. Consider your goals, needs and desires at any age to stay on track for that dream of retirement!

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