Retirement is a big part of a person’s life cycle as it may last 25, 35, or more years. When a person is young, it is easy to put off any retirement planning because, at age 30, retirement at age 65 seems eons away. So how does one prepare financially for life at a different stage? Start saving early.
Start Saving Early
Beginning a saving and investment strategy at an early age can certainly make the accumulation of assets easier. However, in real life, this does not always happen. The more time one has to build account values, the more potential they have for a positive impact to occur. Take advantage of your company 401(k) and employer matching. Consider contributing to a tax-deductible IRA or a nondeductible Roth IRA. Just start socking your dollars away. Too often, investing for our future self gets put on the back burner in pursuit of what feels more meaningful today, like a new car or a shopping spree. Stay focused. The years often pass quicker than expected. It would be downright odd to hear anyone say, I wish I hadn’t saved so much for a secure retirement.
Living Within Means
Saving should start early, but living within one’s means should be a lifelong practice. I’ll stick with the concept of spending on a new car. A shiny new car may seem very appealing, but being realistic about the type of car you buy can save you from a lot of sleepless nights in the future. The allure of hopping into your brand new roadster quickly can become offset by the thought of the next car payment or how your auto insurance will spike with the purchase. It isn’t wrong to want reliable transportation, but buying a champagne car on a beer budget is a problem.
Staying debt-free is a good practice for all stages in life. Good debt helps us build our credit. Bad debt simply puts a drain on our cash flow in the form of high-interest payments for what often turn out to be frivolous purchases. Car debt can be both good and bad. It can help you build good credit if you always make your payments in full and on time. That’s great! However, if you make a car purchase when you have poor credit, you most likely will pay a higher interest rate. This can put a big drag on your finances. Instead of overspending on a car that stretches your budget, instead, consider a reasonably priced ride. This may help you retain a few extra bucks in your pocket that you can in turn apply toward paying down other debt like high-interest credit cards.
Begin a Dialogue with a Qualified Financial Professional
When preparing for retirement in either the near or distant future, begin with an open dialogue about your money, planning, and investment education with a qualified financial professional. It is easy to want it all, but hard to narrow down what is important. Your financial advisor can help keep you on track by reminding you of the dreams you value, helping you set goals, and guiding you to work toward them with a realistic plan of action. For peace of mind start saving early, your future self will thank you.
About the Author
Author, Marianne Martini Nolte, Certified Financial Planner ™ practitioner, provides fee-only, fiduciary, independent financial services. Her firm, IMAGINE FINANCIAL SERVICES (IFS) is a registered investment advisor offering advisory services in the State of California and in other jurisdictions where exempted. Marianne’s focus is serving Women and Young Professionals.
This article is intended as a high-level view. All written content is for information purposes only. Opinions expressed herein are solely those of IFS, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to other parties’ informational accuracy or completeness.