The following is a guest post.
For many young adults, planning for retirement is something that is not necessarily in the forefront of things. In fact, a large number of these individuals tend to take this for granted with the belief that there will always be time for this later on in life. Reports show that three-fourths of the 600 eighteen to thirty-four year respondents surveyed in 2008 were in debt. Today, this number is still alarmingly large, add to this the downturned economy in the past few years.
There are many reasons why many people put aside planning for their retirement. For one, they are limited by present day realities, such as paying off student loans. At this age, one also tries to make good investments for the future, such as buying a home and various properties. Another reason, perhaps a somewhat inexcusable reason for getting in debt, is the spend-thrifty attitude many of us have, especially when it comes to making unnecessary upgrades of technology.
While the mindset “enjoy it while you can” is something we cannot really completely dismiss, it is important to be reminded that planning your retirement has to start sometime. However, changing lifestyles and habits that have been deeply ingrained to our systems may make this transition somewhat of a challenge.
What exactly is retirement planning to begin with? As I’ve mentioned, many probably do not even think about it. Perhaps the only reference to retirement in their minds is anchored only on a vague understanding of their 401(k)’s, pension benefits and nothing else.
Retirement planning is basically allocating funds or finances for retirement. This can include setting aside money in a time deposit , making financial investments, and obtaining assets that can provide a steady source of income when one reaches his or her retirement. Basically, retirement planning aims to allow you to become financially independent so that you can live comfortably during your golden years, or even earlier should that be your desire. This also relieves you of the burden that an unstable economy, social security and pension, especially as the world economy continues to change continually.
The first step to building that nest egg and effectively getting on your retirement plan started must be to eliminate debt as soon as possible. Keep in mind that the larger the debt, the larger the sum of money that is lost in interest and other charges. By simply reducing debt to a bare minimum, one can save a whole lot of money that can be earmarked towards a retirement fund.
Secondly, getting to know your retirement benefits and make the most of your 401(k). It would be highly beneficial for one to be able to understand and maximize these benefits. After all, you are working hard for this anyway.
For those who do not really know how to start going about planning for their retirement funds, consulting a professional or utilizing online financial software can help clarify issues and concerns. This will allow you to efficiently and realistically create a retirement plan. These planners or software can also help you assess your present finances and make realistic allocations for savings. It also helps calculate your funds based on taxes and various hypothetical situations that will allow you to make informed choices.
Lastly, for a good plan to work, there must be execution. After planning the lifestyle changes you are willing to make and setting goals for your retirement nest-egg, sticking to it is key. Without a follow-through to plans, you will have just wasted your time and effort into nothing.
Essentially, living for today is a good thing, but making sure you have a good, comfortable future is equally important.
Marina Chernyak is the co-owner of 1001Shops LLC, a one stop shop of unique imported products like Walking canes, Music boxes and many more.
7 responses to “Building a Retirement Nest Egg”
People who desire to retire early, must first try to follow a proper investment strategy. These strategies will help the investor to gain more profits in a short duration
Early retirement is difficult to plan. Every expense must be thought of and squared up with a fixed sum and income. Definitely worth consulting an expert on!
“Don’t ask what the world needs. Ask what makes you come alive, and go do it. Because what the world needs is people who have come alive.”
That post was really enjoyed the read, I see why quite a few people read it. Apprecaite you taking time out your day to write that. I am currently traveling the world for 3 years on month 18 right now come check us on our blog. See you soon looking forward to next post.
Brian and Rhonda Swan
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Great article about nest egg building. There are plenty of real estate investment opportunities in the Atlanta area. In addition, Active Adult communities seem to be popping up everywhere. More folks are retiring to Atlanta to be near their kids and grandchildren. One of the joys of retiring!
I agree, every aspect must be thought through before making such a huge decision.
Marina you hit it right on when you talked about the importance of planning ahead of retirement, early or otherwise. Too many soon-to-be-retirees are counting on their 401k and Social Security to address their retirement needs without doing the math to see exactly what will be going on. Carefully examining your estimated expenses once retired (don’t forget that ideally this is the time you want to travel and have fun which costs more than sitting at home) and comparing to what will be coming in from all sources gives you a good overview – a starting point – from which to identify potential short falls NOW, while you can do something about it. Okay to live a little for today but plan for tomorrow.