Ever wonder what it might be like to be a retirement “all-star?” To have a plan in place so that you can live the retirement you’ve always wanted, stress-free and confident about your financial future? It all starts with a playbook of important strategies and tools to get you on the road to financial freedom.
Retirement Playbook Tip #1 – Develop a Strategy
It sounds pretty basic – you have to have a strategy. But what does that mean? You need to determine how much you plan to save and set aside for your retirement, and how you plan to do that, in order to protect yourself from your own bad behavior. The easiest way to achieve this is through a systematic payroll deduction; the money is transferred directly to your retirement fund, and the temptation to spend that money is avoided entirely, as if the money was never there to begin with. If you can’t see it, then you can’t spend it. This also forces you to rethink your budget, as the money coming in each paycheck is a bit less. So many people get hung up on “Where am I going to invest my money?” when their first step should be to ensure that a portion of their earnings is going directly to retirement.
Retirement Playbook Tip #2 – Start planning early
With the way that interest and returns work, time is on your side. There are all types of charts and graphs that show if a person starts saving some money in their 20s, then they are way ahead of the person that doesn’t start saving until their 40s. The longer you wait, the less of an opportunity there is to play catch-up with your retirement. The bottom line is to start saving early.
Retirement Playbook Tip #3 – Stick to a Budget
This is a difficult tip for many people, as it can be hard to go out for a meal with family or friends and only allow yourself to spend a set amount. The best thing to do is to start saving right off the top; when your paycheck comes in, put an automatic 10% in your savings. If you can’t afford 10%, then put in 8%, and if you can afford more, then put 15% of your check into your savings. By adding to your savings from the beginning, you are now able to have a more realistic budget for the remainder of the month, and you don’t have to worry about adding extra monies into your retirement, because you have taken care of this step in the beginning.
Retirement Playbook Tip #4 – Update plans on a regular basis
Life is all about change; we change, investment options change, the economy changes, even our job situation changes. Perhaps some of the goals you had when you started thinking about your retirement have since changed, or you want to do even MORE when you retire. A good rule of thumb is that every five years or so, as you go through the workforce and get ready for retirement, make it a goal to update your retirement plans. Get a projection from some of the websites that offer this, or take the step to speak with a financial planner to get a feel for the economic landscape and how you should be evolving your plan to prepare for retirement. Most advisors will offer you a complimentary consultation, even if you might not have the funds to become a client.
We all want – and deserve – the retirement we have always dreamed of. While our lives are continually changing and evolving, our plan for retirement should be a constant. By developing a retirement strategy, starting early, sticking to a budget and updating your plans on a regular basis, you are on the way to achieving a successful financial future. Anyone can be a retirement “all-star” if they follow these simple strategies for financial independence.
This article was written by Joel Johnson from Forbes and was legally licensed by AdvisorStream through the NewsCred publisher network.