There are many people in this world who take life as it comes. They don’t like to dwell on the past or plan for the future. That’s a good philosophy to follow to stay happy in life in the present moment. However, it’s important to know that life isn’t a bed of roses, and money is required to achieve many of the goals that lead to our health and happiness. Today, we’ll touch on retirement planning for different ages.
This is where retirement planning comes into the picture. It may sound like a daunting task to do, but it’s incredibly important. If you are feeling clueless about the process, then this guide will help you.
Retirement planning in your 20s
For most, your 20s is the time when you finish college and start eyeing up the next stages of adulthood. You will most likely still have student loans looming over your head, however, you should try your hardest to plan your investments. You can invest in an IRA and, if you have a job with retirement benefits, contribute to your 401(k).
Consider investing 80 to 90 percent in stocks and 10 to 20 percent in bonds. At this stage in your life you have time on your side, so make the best use of it. The interest from these investments will get compounded to a significant sum over the decade. It may be difficult to part ways with the money now, but it will be more than worth it, literally.
Retirement planning in your 30s
As your career path starts to take shape and gain momentum, hopefully your investments will, too. Now is a good time to start to get a little more serious about your investments and work towards becoming financially independent.
With major purchases and expenses like a wedding, home and/or having kids, it may be difficult again to part ways with money for investments but dedicating a certain percentage of your income is incredibly important for your financial future.
Aim to maximize your 401(k) contributions. If this isn’t feasible, try to at least meet the maximum your employer is willing to match. You should also consider adding some bonds (maybe 20 to 30 percent of your income) to your investment mix to have some safety.
This is also the age when you aim at building a good credit score to take advantage of the best interest rates for larger purchases in the future. Now is also a great time to purchase term life insurance to protect your income and assets. Plus, the younger you are the cheaper the rate, so lock in a lower rate while you can.
You need to be careful about your investments as you age. Consider getting in touch with a financial advisor while choosing different types of funds to invest in.
Retirement planning in your 40s
Your 30s may not have been the best time for you in terms of savings for a number of reasons like having a less than ideal annual income. But when you enter your 40s, you need to get serious. This is the age to focus on building your investment portfolio.
Your financial decisions at this stage should revolve around saving up for your children’s college funds and paying down the mortgage. You need to be careful about your investments at this age. So, consider getting in touch with a financial advisor while choosing different types of funds to invest in.
No matter what, you should stick to investments that bear a good track record of giving returns. You may come across schemes that are too lucrative to be true. Stay away from those and focus on maximizing your contributions to your IRAs and 401(k) investments.
Retirement planning in your 50s
Your 50s is the time when you have more knowledge of Medicare, Social Security and retirement benefits. You also know more about the finances of your aging parents and issues related to caregiving.
Your saving strategy at this age should be simple: avoid adding on to the debt you already have. You should also take advantage of retirement catch-ups during your 50s.
When it comes to strategizing your retirement during your 50s, you should try to have at least six to eight times of your annual salary saved. If you can maximize your contributions to IRAs and 401(k) funds, you have a high chance of filling your retirement accounts, along with funding your medical expenses.
During your 50s, as you get closer to retirement, you should favor stock investments. You should consider having 78 percent of stocks and 22 percent of bonds at this age. You should diversify your investments to maximize your earnings and avoid putting all your eggs in one basket.
Not to forget, this is also the time to take your taxes seriously. You should try to boost your retirement funds by reducing your taxable income. Keep in mind the taxes on sold assets and inheritance you plan to leave. A financial planner can help you make the best retirement decisions.
Retirement planning in your 60s
By the time you are 60, you may have paid off car loans, your mortgage, and credit card debts. You may also be planning to acquire new skills or transiting to a volunteering role or part-time job. At this stage, you really need to stay on the course.
When it comes to strategizing your retirement during your 60s, you should have at least eight to ten times of your salary saved. At this stage, you may want to get your grips on essential saving, spending, and investment concepts to prepare for a fulfilling, happy retirement.
The above are just a few of the many ways in which you can plan your retirement while going through the trajectory of life. Taking these measures early on will ensure that you are financially secure when you end your professional career.
One of the most important financial investments you can make is term life insurance. As mentioned before, the younger you are, the cheaper the rate. So, taking advantage of locking in a lower rate is incredibly important.
Term life insurance is essential for keeping your family’s financial future secure, especially if your loved ones rely on your income to live the lifestyle they currently do.
At Quotacy, we understand how important your life is to your family. Life insurance will give them the means to recover financially and save them from leaving behind the life you’ve work so hard to provide.
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About the writer
Director of Creative Strategy
Greg is Quotacy’s Director of Creative Strategy. He has an eclectic past from working on movie scripts to creating ad campaigns for major brands. His love of creative solutions drove him to strategy, and he now uses his powers to help families protect their loved ones. Outside of work, Greg spends his time off the grid hunting, fishing, camping, biking, hiking, and walking his dogs.