When you graduate from college and start out on your own, retirement may seem too far off to consider. These early years are actually the best time to begin planning for retirement.
Why should you begin planning at this stage of the game?
- Life expectancies are increasing and more people are retiring early, you are going to need more retirement savings later in life.
- Early planning increases your chance of achieving your retirement goals.
- Unforeseen circumstances may interrupt your future earnings and savings.
- Investments need time to grow through compounding, which generates earnings on the reinvestment of interest or dividends.
There are four tasks for retirement planning in your younger years:
1. Evaluate your retirement goals:
If you plan to travel extensively, your needs will vary from those who would like to retire to live a quiet life in the country. These plans are certainly not set in stone, they evolve over the years, but having a direction helps the planning process.
2. Determine your financial needs:
Have an idea of how much money you will need to retire comfortably based on your goals.
3. Create a plan to reach these goals.
You do not need to go it alone in creating a plan, in fact, work with an estate planning attorney to put together a comprehensive plan to not only address retirement needs, but other estate planning tasks as well.
4. Set a budget
Set a realistic budget that includes retirement savings. If you have access to an employer sponsored retirement plan, put it to good use – not only does it defer taxes on savings, but employers often provide a percentage match to your investment.
Beginning to plan for retirement is just one step in building a solid foundation that will serve you well in your later years. An estate planning attorney can assist you with many aspects of these plans, including disability planning, creating a will, incapacity planning and more.