Plan for Retirement

Retirement is something that most people look forward to, but many aren’t prepared for. Fortunately, it’s never too late—or too early—to start thinking about how you’ll fund your retirement. If you’re banking on Social Security, you might want to adjust your expectations for how much Social Security will add to your monthly income. Although nothing is set in stone, most analysts agree that the Social Security program will need a major overhaul in order to continue. What that means is unknown, so when you’re planning for retirement you might want to count only what you can personally save.

Whether you’re starting your plan in your 20s, 30s, 40s or 50s, read on for some great tips and tricks to help you reach your goals.

In Your 20s

If you’re in your 20s, now is the ideal time to start saving for retirement. You have plenty of years ahead of you in the workforce, which means compound interest has time to work wonders for your retirement fund. If you make sure you start off on the right foot, you’ll be poised to reap big rewards later on.

1. Take full advantage of an employer match: If your employer offers matching funds on their sponsored retirement plan, put at least that much aside. Even if the plan offered isn’t the best, the additional funds you get through the match is great. It’s free money…take it! Keep increasing the percentage that you contribute each year. As your salary goes up, so should your retirement contribution. You’ll never miss money that never hits your checking account, so plan on setting aside the additional funds that come your way right away before you have a chance to miss it.
2. Get your finances in order: When you’re in your 20s, you might be finishing school and getting that first big job. Although your peers might be spending everything that they’re making (and more), resist the urge to keep up. Instead, get (or stay) out of debt by learning to live within your means. That might mean forgoing something on your wish list, but in the long term it’s worth it. Once you rack-up a lot of debt, it can take years to pay it off. In some cases, you might even pay more in interest over the life of your balance than what your original balance was in the first place. Consider whether the item on your wish list is worth paying for again, and again…and maybe again over the next several years while you pay-down your balance. Once you’re out of debt, continue to charge small amounts that you can pay off fully each month. That will help you build good credit that will help you obtain lower rates when you’re in the market for a car or a house.
3. Determine your comfort level with risk: If you’re starting your retirement savings in your 20s, you have a lot of time to ride-out any bumps in the market that go along with more aggressive strategies. The more aggressive you are, the faster you can make gains. But those gains come with some risk, so make sure your strategy is in tune with your tolerance for risk.

In Your 30s and 40s

Maybe you’ve already started on the path in your 20s, or maybe you’re just getting started. Either way, your 30s and 40s are the time to reevaluate what you’re doing and make changes if needed.

1. How much risk is too much?: In your 20s, there was plenty of time for time to smooth out any bumps that comes with a more risk-based portfolio. Once you hit your later 30s and early 40s, you might want to change to a less aggressive strategy.
2. Increase your efforts: Your 30s and 40s are the time to get more serious about saving. Yes, any amount is beneficial, but now is the time to figure out when you want to retire, how much you’ll need to live on, and what you’ll need to set aside now to make that happen. Although there is still time, there’s less than you had in your 20s so your savings efforts need to be more concrete.
3. Pay yourself first: Your 30s and 40s might be spent raising a family, and if that’s the case you may be tempted to save for your children’s education before you set aside funds for retirement. Resist the urge. Just like on a plane, where in an emergency you put the oxygen mask on yourself first, make sure that your retirement plan is taken care of before you think about setting aside money for your kids.
4. Get debt under control: It’s important at any age, and something that will help you both now and when you hit retirement-age. If you’re debt-free, congrats! Charging a small amount and paying it off each month is a great way to keep your credit score high. If you’re carrying a balance, first figure out how to stop the bleeding…put an end to charging anything. Next, figure out how much you can afford to pay each month without draining your wallet to the point that you need to charge everyday living expenses. Stick with the plan, even if it takes several years. If you have extra income through bonuses, raises, etc., pay that towards your retirement and your credit card debt.
5. Protect your family: If you have a spouse, children, or people who rely on you financially, you’ll want to protect them by getting life insurance coverage. Term life insurance is a great option to protect your family for a set number of years…even during the time that your children are in college. As a member of Rivermark, you have access to lower-cost life insurance options as well as car and homeowners insurance. It’s also important to set-up a will to outline how your assets should be distributed, as well as who should take custody of your children.

In Your 50s

1. Start now: If you don’t have retirement savings, or you have less than you feel you’ll need, don’t wait. Start now. Even if you don’t have a plan yet, you know you’ll need money to put one into action, so start setting aside funds that you can work into a plan later on.
2. Evaluate where you want to be: Determine what you’ll need to live on during your retirement years. Start planning a general budget for those years so you know what you will need both for everyday living as well as for travel. Consider getting a part-time job to make extra funds, and earmark those funds right off the bat for retirement. A part-time job now might help you to avoid a part-time job after you turn 65, and the funds that you set aside now will still have time to accumulate interest so you’ll get more bang for your buck.
3. Get aggressive: Get aggressive about saving, and get aggressive about where you put your money. Plan on setting-aside at least 10% of your income, and more if you can. You need to gain some ground relatively quickly, so what you don’t have in time you need to make-up in amount. If you’re not already doing so, take advantage of your employer retirement program—especially if they will match a percentage. It’s free money, and will help you get on the retirement path that much quicker. If your employer doesn’t offer matching funds, open your own IRA account. You’ll still be able to put away pre-tax dollars. Another great way to gain ground is to reevaluate your debt situation. Pay down high-interest credit cards as quickly as possible while still contributing to your retirement fund. You don’t want your retirement savings to go towards debt. Think about downsizing to free-up extra funds. You might have a larger home than you really need, or more cars than are truly necessary at this stage of your life. Take a hard look at where you spend your money and figure out whether you can make some cuts.
4. Play catch-up: Once you’re over 50, the amount you can contribute on an annual basis to your retirement plan(s) increases. If you can max-out your annual contributions, all the better.
5. Consult with the experts: You aren’t alone, and you don’t have to do it alone when you’re formulating your plan. Since you’re closer to retirement, it’s even more important that you bring in the experts now to help you get your plan together. You don’t want to make a misstep in where you place your funds, since you don’t necessarily have the luxury of time to make corrections.

Wherever you’re at in your retirement journey, Rivermark is here to help. Our Certified Financial Coaches can help you set up, adjust, and reimagine how you want your retirement to look. At Rivermark, our goal is to provide our members with the best resources, tools and coaching to help you improve your financial well-being.

Investment Advisory Services are offered through HUMAN INVESTING, in association with RIVERMARK COMMUNITY CREDIT UNION. The investment services and products are NOT FEDERALLY INSURED, NOT OBLIGATIONS OF, AND NOT GUARANTEED BY THE CREDIT UNION OR ANY AFFILIATED ENTITY, AND SUBJECT TO NORMAL INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.