Retirement
- projectdoneangie
- Jun 11, 2012
- 3 min read
Are you saving for retirement? Most of us don’t think that far into the future when we are in our 20’s and 30’s. It seems that when we are in our 40’s and 50’s and life happens (divorce, death, aging parents, etc.), we suddenly realize how important retirement planning should have been.
Savings goals in our 20’s and 30’s are all about paying off our college loans, buying a house, going on vacation, having nice cars and the lifestyle that we want. We can still have all of those things if we are also planning for our future. If we are fully funding our retirement accounts with as little as $300 per month, the money will compound and grow to over $1 million dollars in the next 40 to 50 years.
The earlier we start, the less it will cost us to fund our future. With 40 years to retirement, we only need to save $287 per month (based on an 8% rate of return compounding daily). With 30 years, we would need to save $671 monthly. With 20 years, we need to save $1,698 monthly. With 10 years, we would need to save $5,466 per month to reach the $1 million dollar mark and make our retirement dreams a reality.
We will need this money in our 70’s and beyond to afford an active lifestyle. If we can focus on saving 15% of our annual salary, we will be on the right track. Our salaries grow as we gain experience so our savings can grow as well with discipline and practice.
If we retire with no savings or have no plans to save for retirement, we become a burden to our families. Our children should be saving for their future and not be burdened with our expenses. Ending up broke and alone, living on Medicare in a nursing home, is not the way I want to exit this life. My goal is to live a full, active, healthy lifestyle. So, I eat right, exercise and I am actively working on my retirement goals.
For some people, a partner or a friend with the same goals might help us stay accountable to our plan. Having someone to talk to about future goals and dreams, keeps us motivated and on track. Getting our future under control makes today more enjoyable and much less stressful. The stress of poor money management can be corrected with time, effort and a little help.
To find out how much you will need to meet your financial goals, use the online retirement calculator at http://www.aarp.org/work/retirement-planning/retirement_calculator/ or http://personal.fidelity.com/planning/retirement/income_planner.shtml. There is a short interview to complete which helps us focus on the steps needed to get our financial life in order.
Take full advantage of the 401k option from our employer and the nest egg is started. The self-employed can fund an IRA or a Roth IRA. The sooner we start, the more aggressive we can be with our investment strategies. However, it isn’t too late to start today if life has changed your financial situation. If we are starting over from scratch in our 40’s or 50’s we need a well-planned strategy. Maybe a raise at work can be our nest egg starter and if we work a little bit longer to 70 or 75, we will give this money time to compound and grow.
Do not use retirement funds for today’s expenses. Many retirees’ now regret this decision that seemed so reasonable in their youth. Use this money for its intended purpose; to support a comfortable lifestyle in retirement. And if we find that we haven’t reached our savings goals at retirement, a firm budget, healthy lifestyle and part time employment along with social security and the savings that we have accumulated may change some plans but will still allow us to live a self-sufficient lifestyle with dignity.
I am here to help and answer any questions that you have. You can subscribe to my blog for future information or send me a message on my Facebook page at http://Facebook.com/ProjectDone which I will gladly answer.
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