When I speak at events, people will often ask me for retirement advice. One of the first things I want to know about you is your age. Now, I’m not trying to get too personal, but knowing how old you are matters because it determines the kind of advice I’d give you. Getting ready for retirement when you’re 35 is vastly different than when you’re 61!
Since I can’t talk to everyone face-to-face, here are some quick tips for preparing for retirement based on your age and stage of life.
Your 20s—Get Started
If you’re already planning for retirement in your 20s, you’re ahead of the game! These years are perfect to start letting the wonder of compound interest work for you. Here are some things you need to do:
- Get out of debt. If you’re like lots of people your age, you have student loans hanging around your neck. Pay off your loans and personal debt before you save for retirement.
- Start on a budget. A budget tells your money where to go and keeps you from spending more than you earn. The earlier you begin, the better off you’ll be.
- Open a 401(k). Lots of employers offer a retirement plan, so take advantage of it and max out the employer match. If you start saving roughly $200 a month at age 25, assuming a 10% return on your investments, you’ll be a millionaire at age 65!
Your 30s—Sharpen Your Dream
Don’t believe the lie that you don’t need to worry about retirement yet. The planning you do—or fail to do—will impact the kind of retirement you’ll have. Make sure you’re doing these things:
- Keep your spending under control. As your career grows, so will your paycheck. Don’t boost your lifestyle every year. Put raises toward retirement.
- Increase your investments. Get a little more aggressive with your monthly contributions to your 401(k). If you start saving $370 a month at age 35, you could still hit $800,000 by age 65.
- Don’t try to keep up. You don’t need to compete with your friends over what you drive, where you live, or what you wear. Most of your friends are deep in debt, and you don’t want to go there!
Your 40s—Stay on Guard
With aging parents, kids preparing for college, and everyday stresses in this decade, retirement planning can get lost in the shuffle. Stay on track by focusing on these tasks:
- Keep your dream alive. Don’t let regret steal your retirement dreams. Leave the past where it belongs (behind you) and replace it with the determination to change your future.
- Kick your investments up a notch. If you haven’t started saving, then get busy! Remember compound interest? You need time to make it work. If you put away $1,000 a month from age 45 to 70, you can still bank over $1 million. Not bad!
- Don’t let your guard down. The “I deserve” trap can sneak up on you and before you know it, you’ve bought that new boat or splurged on a big vacation. Don’t let 15 minutes of stupid steal your retirement dream.
Your 50s—Get Mad and Get Busy
By now, you should be investing 15% of your income until you’ve paid off the mortgage. After that, throw everything you can into your retirement fund. Here are other things you can be doing, too:
- Get mad! If you’re behind in saving for retirement, it’s time to get some fire in your belly! You don’t have time to waste. Keep that retirement dream in mind and buckle down, saving as much as you can. You can do this!
- Adjust your expectations. If you’re just now starting to save for retirement, you need to be realistic about your dream. You’ll need to work longer than you imagined. And you’ll want to delay your Social Security benefits until age 70 so you can get the full amount—or even later to get up to 124%!
- Find money you already have. It’s time to get creative in finding money to invest. Can you sell your house and downsize? You could buy a smaller place and put the rest of the money toward retirement.
Your 60s and Beyond—Prepare Your Legacy
Ready or not, here it comes. In these decades, you are face-to-face with retirement. Here are some things to do at this stage:
- Talk with an investment pro. No matter how much you’ve saved, you need to talk to a financial advisor to discuss your financial situation. Work to create a budget for retirement and to protect any wealth you’ve gained.
- Do what you can. If you take action now, you can still build some retirement savings. Max out your 401(k) contributions and take advantage of the catch-up options. Put away every bit you can. Some is better than none!
- Leave the right legacy. You will leave a legacy behind, but only a small part of that is money. Your greatest gift in these decades is the time you spend with those you love. And whatever you do, don’t leave your family a legacy of debt.
Retirement planning is a marathon, not a sprint. Stay laser-focused and keep working toward your goal. It’s never too early and never too late to start planning for retirement, so get busy!