No matter your age, if you are working, it’s time to start retirement planning now. You must have a plan, because retirement does not happen all on its own. When to start retirement planning can be tricky, though. All of the critical information you will need to complete your retirement plan may not be available to you. So, what should you do?
Planning versus saving
You can start certain aspects of your retirement planning early. The first step is to start saving for retirement, and that can start at any time. But, understand that saving and planning are two separate things. Start saving as soon as possible because, the sooner you start saving, the more you will have saved by the time you retire. Creating your actual retirement plan, however, should be done a little farther down the line.
Start your early planning around age 35
Most people start their actual retirement planning around their mid-thirties. The initial planning at this stage does not have to be extremely detailed. More likely than not, there will be numerous changes taking place in your life that may require adjustments to your plan. But, in your mid-thirties, you should at least start considering when you want to retire, so you can try to estimate how much money you will need. At this time, you can determine whether your goals are truly realistic, based on the savings you have been able to accumulate to that point.
Formulate concrete retirement goals at age 45
When you have reached your mid-forties, you should have a better understanding of your financial situation, and real retirement planning can begin. Decide whether you want to travel, or if you are going to stay in place, where you want that to be. This stage is still centered on creating your goals. However, you should have a good idea at this point how much money you should have at retirement.
Focus on your investments around age 50
Once you reach 50, the serious retirement planning should take place. Look at your investments and determine whether they need to be transferred to safer, more stable accounts. At this point, growth is less important, and preserving the money you have saved becomes the primary goal. Determine when you will become eligible for any retirement benefits, because the age you start receiving disbursements can have an effect on your overall retirement plan.
Social Security benefits will not be sufficient for a comfortable retirement
There was a time when retirement was financed chiefly through employer-sponsored plans and government benefits. That is no longer the case, as the future of social security benefits may be uncertain. Retirement planning may be more crucial than ever. The purpose of social security benefits, in reality, is to provide the bare minimum standard of living for retirement. Without an appropriate retirement plan, your golden years may not be as comfortable as you hope. So, start the planning process now.
If you have questions regarding retirement, or any other estate planning needs, please contact Sexton, Bailey Attorneys, PA online or by calling us at (479) 443-0062.