Did you know that the average American spends approximately 20 years in retirement?
The thought of two decades of relaxation and enjoyment might sound appealing, but it comes with a critical question: Will you have enough money to comfortably sustain yourself throughout those years? If you’re uncertain about your retirement savings, you’re not alone. Many people find themselves with these questions without a clear answer.
We’re here to help ease your worries and provide valuable insights to make sure you’re well-prepared for your retirement journey.
Understanding Your Timeline
Before diving into the many facets of retirement planning, it’s important to recognize how much time you’ll be in retirement. Two decades is a long time, during which your financial resources must support your lifestyle, healthcare, and goals. Knowing this, careful financial planning is essential to a comfortable and stress-free retirement.
When to Start Saving
According to Investopedia, it’s smart to begin saving for retirement in your twenties. Retirement may seem like it is years away but starting to save as early as possible will ensure you have enough money to get you through all of retirement.
How Much Should You Save?
Creating a budget is always a smart way to start saving and getting control of your finances. However, if your company provides a 401(k) plan, you can use it to really amp up your retirement savings. This way, you’re saving money without even thinking about it, which helps you resist the urge to spend.
Another option is to start putting money into an IRA for your financial well-being down the road. And guess what? Getting to a million dollars saved by the time you retire isn’t all that crazy! The secret here is time. When you invest in your savings consistently and give it enough time to grow, you can end up with a well-off balance.
Want to hear an example? We went to Vanguard to see what they said about it. Essentially, all you have to do is “save just under $4,500 per year over a 45-year career,” and you can come out with over $1 million “by the time you retire.” If you have the opportunity to participate in a retirement program where your employer matches your contribution, you could save as much as $2,250 and still meet your goal. Now imagine if you did both!
To meet the $4,500 goal, you would have to save roughly 375 dollars a month. On a tight budget, this might seem impossible. However, it would be a good time to look at all the unused expenses within your household. What subscriptions can you cancel? Turn off all those lights and reduce your electricity bill! If you still can’t meet the goal after minimizing your expenses, go a little smaller on the savings end. In the end, any retirement money is better than no retirement money.
Bottom Line
Securing a comfortable retirement requires thoughtful planning and action. Starting your savings journey early, taking advantage of retirement programs like 401(k)s or IRAs, and being mindful of your budget can provide financial stability during retirement.
Remember, the key is to start saving as soon as possible – every contribution brings you closer to the retirement you’ve always dreamed of. The sooner you can start saving, the better.
Sources:
https://investor.vanguard.com/investor-resources-education/retirement/savings-when-to-start
https://www.fool.com/retirement/2018/02/24/heres-the-average-length-of-retirement-will-your-m.aspx