A quick guide to retirement planning

Have you ever had one of those nightmares that feels a little too real? You know the ones: you show up to work only to realize you have a deadline that you didn’t meet, or you are checking out at the grocery store only to realize you don’t have your wallet.

I have a recurring nightmare that I wake up on the morning of my first day of retirement only to realize I don’t have any retirement savings – talk about terrifying.

For me, there’s nothing scarier than not feeling prepared for my financial future. So to make sure that these bad dreams don’t become a reality, I have been proactive about sticking to a retirement savings plan from an early age.

Now, as a millennial, I know that retirement can feel really far off which makes it feel like less of a financial priority than, say, buying a home, paying off student loans, or preparing to start a family. Plus, I’m under no delusion that planning for retirement can feel really complicated and stressful, making it all the more appealing to put it on the metaphorical back burner.

But if I have learned anything from my years working in the finance industry, it’s that when it comes to saving for retirement, your most valuable asset is time – the sooner you start, the more time you have to prepare financially for your future and take advantage of benefits like compound interest and employer-matched 401(k)s. 

And the best part? Retirement planning doesn’t have to be complicated, or intimidating, or the fuel for nightmares. In fact, you can make huge strides towards preparing for your retirement with just a few minutes and a few simple steps so you could be resting easy in no time!

Write down your goals and vision for your retirement

The first step to creating a retirement plan is understanding what kind of life you would like to lead in retirement, so take some time to figure out what you want your retirement to look like.

What age would you like to retire? What are your goals for retirement? Where would you like to live when you retire? How will your current budget and spending habits change when you retire?

Maybe you want to retire to the coast of Italy, or spend a year studying yoga in Nepal. Maybe retirement will be the perfect opportunity to renovate the vintage camper of your dreams. However you want to spend your golden years, the more specific you can be the better you can plan accordingly!

Use a retirement savings calculator

This is one of my favorite financial tools that I use personally and have recommended to my audience since the start of Her First $100K™!

A retirement savings calculator takes your current income and expenses into consideration and helps you figure out if you are on the right track to reach your retirement goals. This will help you see how much time you have to prepare for retirement and what you can start doing immediately to set yourself up for financial success in retirement.I personally use this retirement savings calculator from Personal Capital and it has been instrumental in helping me reach my retirement savings goals. In fact, it was this very calculator that helped me realize that I could retire tomorrow if I wanted to – now that’s a dream come true!

Create a retirement plan

Once you have written down your goals for retirement and have visualized your savings trajectory with the retirement savings calculator, you can move on to creating a detailed retirement plan.

The basics of your retirement plan should include how much money you will put towards your retirement savings each month, as well as where that money will go. This may vary from person to person, but here is what I personally recommend:

  • If you have an employer-matched 401(k), contribute at least up to the match percentage so that you will get the most bang for your buck. It’s essentially free money, so take advantage of the opportunity!
  • If you have already maxed out your employer-matched 401(k) (or if you don’t have one), consider opening a traditional or Roth IRA to help you achieve your retirement savings goals. These retirement accounts are tax advantaged, though in different ways, so pick which one works best for you. Traditional IRAs are tax-deferred, which means you only pay taxes on the distributions you take from the account in retirement. meaning that you don’t pay taxes on the money you put into the account, making it a “pre-tax” account. With a Roth IRA, on the other hand, your deposits are taxed when they are made. That means, when you’re ready to withdraw money from your account after age 59½, you are not taxed at that time. 
  • Max out your Health Savings Account each year to receive tax benefits as well as to prepare for future health care costs.

Invest in life insurance

Now this may not directly benefit you in retirement, but life insurance is a valuable tool that helps prepare for your family’s financial future and may offer you peace of mind as you navigate planning for retirement. Not only will you be able to dream sweetly knowing that you are financially prepared for retirement, but also that your family may be provided for long after you are gone.

I always recommend using Ladder’s life insurance calculator because it helps make choosing the right term life insurance policy for you, your family, and your budget easy and accessible.

Schedule an ongoing money date

One of my favorite financial tools is the “money date”. This is time that you set aside for yourself or you and your partner each month to enjoy a glass of wine, play some relaxing music, and review your finances and check in on your financial goals. 

While I recommend starting with a monthly retirement money date, you can gradually reduce these dates to quarterly or even every six months once you become secure in your retirement savings strategy. Be aware that your retirement plan may require changes or adjustments based on significant life events such as job changes, getting married, or having children.

The money date is the perfect opportunity to review the progress you are making towards reaching your retirement savings goals and make sure that you are still on track.

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