The stock market may be bouncing back, but as any economist can tell you, that’s not a clear indicator of a strong economy. 38% of Americans couldn’t come up with $500 if they needed to, and 25% have no form of savings.
Unfortunately, savings, and especially retirement savings, are essential. Having money set aside for the future allows greater financial freedom, as well as the opportunity for investment growth.
But what if you don’t know what smart retirement planning entails? How can you start saving for the future?
Keep reading for a retirement planning guide that will ensure you have what you need for your post-work life.
Take Your Current Age Into Account
The first thing you’ll need to do is consider your age. It’s never too late to start saving, but people of different ages need to go about doing it in different ways.
If you’re younger, putting your assets in stocks is a smart idea. You can expect some levels of volatility, but you will see profit growth over time.
People nearing the end of their work lives should put their money in more secure outlets, like bonds. You won’t see a lot of growth, but you’ll be able to preserve the capital you have.
Calculate How Much You’ll Need to Spend
The next thing you’ll need to do is take a realistic look at how much you’ll be spending after retirement.
While you might think that you’ll be spending less than you are now, think about what the first few years of your post-work life will entail. For many people, it involves trips around the world and a ‘treat yourself’ mentality.
Be honest when predicting your spending habits. If you’re not, you’ll only end up hurting yourself.
Understand Portfolio Risks
Make sure that you’re clear on risk levels when investing your money long-term. You always want to be comfortable with the level of risk.
Avoid micromanaging your finances. If you have investments in stocks for the long-term, then you should be able to expect some level of volatility. If you’re not comfortable with that, put your money in a safer option.
If you’re not well-versed in finance, it might be worth it to hire a certified financial planner. They’ll be able to help give recommendations as to where you should invest your money.
Don’t Forget About Estate Planning
Remember that a retirement plan also needs to factor in estate planning. To ensure that you go about estate planning the right way, make sure to meet with lawyers, accountants, and other professionals.
You also need to take taxes into account when estate planning. Again, look for people who can give provide you with professional expertise to help you through the process.
Make Smart Retirement Planning a Priority
Far too many people don’t plan for the future, but luckily, it’s never too late to start. Smart retirement planning will benefit you in the long run, so make sure to do it. Use the tips mentioned in this guide to help you get started.
Did you find these retirement planning tips to be helpful? If you did, make sure to check out some of our other posts for more finance-related guides and tips.