No matter what age you are, if you haven`t already begun, you need to start saving for retirement now. Financial expert Rachel Langlois from Cyprus Credit Union breaks down the guidelines to start saving.
Come Up With Goals
How do you envision your post retirement life? Do you want to be able to move closer to grandkids or maybe someplace where you can golf all year long. Whatever your dream may be, you need to tailor your savings plan to fit those goals. Even if you don`t have specific plans in mind (perhaps retirement is still decades away) you should plan on your retirement funds to cover at least 80% of your salary. Keep in mind that your peak earning years are in your 40`s. Every time you receive a raise at work, increase what you are contributing to your 401(k) or other retirement account.
Have a Strategy
While many people opt to use their employer`s retirement plan, there are many other options for those who choose another route or don`t have that option available to them. One of the most common ways to save for retirement is a 401(k) plan. Don`t forget to take your social security benefits into account while selecting your savings method.
Pay Off Debt
The less debt you have at retirement, the better. Come up with a plan now to get rid of as much (or ideally all) of your debt as quickly as possible.
Leave it Alone
Once you start saving for retirement, and this is the most important thing on this list, do not touch your retirement savings. NO EXCEPTIONS. Withdrawing early can result in fines as well as losing out on interest and principal. You should always have an emergency fund that has three to six months worth of expenses for those unexpected costs that may tempt you into dipping into your retirement. Most of the time, you should allow your retirement to grow and focus on other parts of your financial wellbeing.
However, this doesn`t mean you can go into autopilot. The plan you come up with should be updated annually, at the very least, to make sure you are still on track with market fluctuation, adjusting for life changes, and allowing for standard of living increases.
If you are behind on your retirement savings, there are some things you can do to catch up.