If you’re in your 30s, serious planning for retirement begins now. Odds are you have never taken a close look at your earning potential and long-term needs, or thought much about all the savings and credit options before you. Now is the time to get real about such things because your life is changing in ways that you may only be beginning to appreciate.
When you’re in your 30s, you are in a unique position from a retirement planning standpoint. For most of us, these are the “make or break” years. Here’s why.
It’s certainly understandable how individuals in their 20s are too busy with distractions in their lives to think about retirement. It’s so far away, and really not on their radar screen. But most 30-somethings have settled-down a bit. Perhaps you’re even married and have started a family.
The point here is that by the time you’ve reached age 35, most of us know exactly what we want out of life. We know where we want to live, and we have pretty solid ideas about our career goals. You’ve also been working for more than ten years, and you have come to realize that retirement is not too far away.
So what exactly is so special about being in your 30s when it comes to retirement planning? The unique opportunity you have is simply this: You should have a good understanding of what it takes to make all your monthly payments by now. And with nearly 30 years to save for retirement, you still have time on your side.
Remember, retirement plans made after your 30s need to be much more aggressive than those made while you’re still in your 30s. But you have to start early to save more. Capitalise on the compounding effect of interest!
Here’s a good illustration of how much will you probably need for your retirement!
So besides starting early for retirement planning and taking advantage of the compounding effect to make your money grow, you should invest right. You need to diversify your investment to grow your retirement nest egg.
As you pass through various phases in life, different needs take priority at different stages. Retirement may seem too far away for young singles. There are immediate needs such as building your career and buying a car. By your thirties, you might have bought a house, gotten married and started your own family. As you approach 40, commitments like caring for parents, children and paying off mortgage loans further delay your retirement planning.
Whatever your life’s concerns, retirement will be upon us one day. Rather than meet it unprepared, take the first step now to ensure a financially secure retirement!
Some begin even before they reach their 30's. In my case, I follow a simple checklist in moving into financial stability before I reach retirement age, and that is to improve cash flow, be free from debt, have emergency funds, get insured, and plan investments.
ReplyDeleteWhile you can switch the last 2 items, and emergency funds are always a good idea to have at all times; it is important that you clear the first two before you do so.