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.