How do you see yourself in retirement…spending time with grandkids, traveling to exotic places, or maybe starting a second career? Retirement goals are distinctly your own, but everyone shares the same challenge of saving enough to make their dreams a reality. Here are some retirement planning tips to keep in mind:
Get started early.
Young people usually don’t make saving for retirement a priority because it’s such a long way off. But, now is the time to get into the savings groove. Putting away even a small amount consistently helps to build a savings routine that may stick with you for life. It’s even more effortless if you have the opportunity to participate in a 401(k) or other tax-favorable retirement plan through payroll deduction at work. Saving early offers the potential advantages of a long time horizon and compounded earnings.
Don't overlook matching contributions.
Not only is it a good idea to participate in an employer retirement plan, it really pays to take advantage of any matching contributions your employer may offer. When your company matches your contributions at a certain percentage, it’s equivalent to getting free money for retirement.
Know your cash flow and set goals.
Any financial planning endeavor usually starts with an assessment of cash flow. You need to analyze what you’re earning and spending to help uncover money for retirement savings. Put it down on paper or record it electronically to help calculate a realistic amount to save after expenses are paid. You can identify areas to trim that will ultimately put more money in the bank, like paying down high interest debts. Documenting your budget also helps you project your expenses and estimate what you may need during retirement.
Consider investing in an IRA.
If you’ve taken maximum advantage of an employer’s retirement plan or you don’t have access to one, think about investing in a Roth or Traditional IRA. These accounts allow you save with tax-free growth or on a tax-deferred basis. Today, there’s an IRA to suit just about everyone’s objectives. Whether you’re investing in Traditional or Roth IRAs, your tax and financial advisors can help create the right IRA strategy for you.
Organize your retirement assets.
As you get older, you’ve likely accumulated savings in more than one place. You may have assets scattered among a number of different accounts, especially if you held several jobs over the years. If you own multiple IRAs and/or left retirement assets in previous employers’ plans, think about consolidating them into one IRA to reduce account expenses and make asset allocation easier. Your advisor can help you identify and organize all retirement accounts to create a holistic consolidation and asset allocation plan.
Keep an eye on asset allocation.
Diversification remains an integral part of your financial plan at every age. Working with your advisor, you can develop an asset allocation strategy that focuses on growth in the early years and balances growth with income in later years.