Fast Track to Retirement
If you’ve ever said the phrases, “Time flies” or “There just aren’t enough hours in the day”, then this post is for you. If you’re like many of us, you are stuck in the daily grind of waking up, going to work, paying the bills and maybe caring for a family with children. One day you wake up and think, “Where has the time gone?” Sound familiar? One minute, you’re graduating and starting a career then you blink and suddenly retirement isn’t as far away as it seemed. Sure, it would have been nice to save bundles of cash since the day you started working, but this isn’t a perfect world, and stuff happens. Now, you have to fast track retirement savings. So, where do you begin?
Since retirement is not a one-size-fits-all goal, you have to figure out what YOU need to make it work for you. That means sitting down and determining your retirement goal. This isn’t entirely dollars and cents, folks. Think about what retirement as a lifestyle means to you. What do you want to do after you walk away from your nine-to-five? Are you planning to hit the road in an RV? Is international travel more your style? Just want to stay close to home? Whatever your plans, put them down on paper. You will then use these goals to help you establish a financial goal.
Now that you have an idea of how you want to spend your retirement, you can start thinking about how much those dreams are going to cost. I don’t expect you to do this alone. It’s always a good idea to chat with a Financial Advisor who is familiar with your goals, your finances, and your investments so that they can guide you in the right direction. Our on-staff Financial Advisor, Roderick, is a wonderful resource for planning for your future – however far away that may seem today.
If time is on your side, that’s wonderful! Maximize those 401(k) contributions, open an IRA, and consider investing in a *slightly* riskier portfolio to maximize your return, and stash all of your extra cash. Don’t forget about Roth savings products, which allow you to withdraw funds tax-free, since you’re paying taxes on the money upfront. Check with your financial institutions – many offer these types of accounts at favorable rates.
IRA Quick Tip
Normally, there are limitations on these accounts that cap annual contributions at $19,000 (2019), however, if you are 50 or older, you can contribute an additional amount to your IRA as a catch-up contribution. Just talk to your accountant, and/or Financial Advisor to make sure your money is working for you.
No matter where you are in retirement planning, there are things you can do to prepare.
Utilize your salary NOW
If you are still working, make sure to take advantage of any employer-sponsored 401(k) matches. Don’t leave free money on the table.
If you get an annual increase, don’t spend it all. Increase your savings from the start so you’ll never miss the extra cash.
Review your investments during open enrollment. Make sure your goals align with the investment plan or strategy.
Of course, a beach zip code would be great now, but working as long as you can is a smart financial move. Waiting to claim social security can have a big impact on your bottom line when you need the money.
Review and revise
Review your retirement goals often. If you REALLY want to quit working, it may be necessary to reduce your expenses, revise some of your plans or increase savings in other areas to get you where you want to be sooner instead of later.
Ditch the debt
A fixed income means no annual increases, promotions or bonuses. Sure, you can get a part-time job and have some fun money, but for people looking to break free from the daily grind, a part-time job may not be in the cards. In that case, you will want to minimize the amount you have to pay out each month to as little as possible. Work on paying off the debt and reducing your expenses in favor of saving.
The bottom line is to eliminate all or as much debt as you can to live comfortably and do all of the things you set out to do when you first started planning your retirement goals.
Now that you’re a retirement all-star, it’s time to think about…Estate Planning!
I know, it’s a bummer to think about, but here is the good news…once you set it up, the hard part is over. You can review it again as often as you want to, or need to (a good rule of thumb is to review it after major life changes, or if your assets change). Your estate plan can (and should) include:
Naming an executor who can act out your wishes.
Life insurance policies and bank account information.
Power of Attorney (and a living will, which can indicate how you want to be cared for in the event you become incapacitated or unable to communicate your wishes for end-of-life medical care).
Create a Final Arrangements document, which includes your wishes for burial plans.
I know what you’re thinking, “But, Krista, I don’t really have anything to leave to anyone. Isn’t estate planning for rich people”? The answer is, NO!
No estate is too small. When my grandmother passed away, I knew I wanted her hand mirror – a small double-sided mirror that probably cost her about $2.00. It meant more to me than anything else because of those memories I had with her and that mirror. I would be willing to bet your family is no different. Even if you don’t have a lot of items with monetary value, you can still choose to leave items that might have sentimental value for your family or friends to cherish after you are gone.
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Krista Kyte is a personal finance blogger and personal banker with over 17 years of experience in the financial industry. Krista is passionate about helping our members understand their financial situations. She writes tips that will help consumers reach and maintain financial security, and start living the life they’ve always wanted.