While in your 30s most of us are not concerned with retirement or how you will make ends meet when you are 65. But it is more important than you know to start early in order to get your ducks in a row to make sure your golden years are, well, golden.
Requirements to Retire
No matter how old you are we all look forward to retiring. Whether by the ocean or in your current home, the thought of finally reaching the point where you can relax and enjoy the rest of life is exciting. While some people fully retire, many people continue to work but enjoy having the peace of mind knowing that they can stop working at any given moment.
However, in order to be able to retire you must have saved enough money from working in order to be able to cover the expenses you will have to live comfortably without working. The only way to do this is to begin as early as you can and know your options. The more you earn, the more you should contribute to savings accounts such as 401Ks, individual retirement accounts, or other types of retirement savings plans.
Many people choose to use savings accounts in order to save money for retirement. Unfortunately, many do not realize that while this is a better option than none, most of the time, these accounts do not have the tax advantages that other accounts created for the purpose of helping you save for retirement. See more info about: Tax Deferred Retirement Accounts
Some non-profits and other public sector and educational institutes offer what is called a 403b for employees. Similar to a 401k, you can contribute a certain amount per paycheck to these retirement plans and many employers will contribute a certain amount towards matching your contribution. This option is an easy and quick way to make sure your retirement fund is started as early as possible.
How do You Know if You Are Ready?
It is estimated that 15% to 25% of Americans are unprepared for retirement. These figures leave a good 75% to 85% of the remaining Americans “close to prepared” or “very prepared”. The majority of these Americans are not in their 30s. As discussed earlier, early preparation is the key. Many times, the younger the worker, the less importance they place on preparing for retirement. Most of them are more concerned with the here and now instead of the future.
The best indication of readiness for retirement would be to know if you lost your job today would you still be able to go on as you have been doing? Would your life change drastically? In addition to your normal everyday bills, you also must consider health costs. As people get older they need additional health care and funding. Do you have a family to take care of? Would they also be able to live off of what retirement you have saved or are they old enough to support themselves? These are all questions that can help you decide if you are ready for retirement when the time comes.
- How to Retire Happy, Wild, and Free: Retirement Wisdom That You Won’t Get from Your Financial Advisor – although it’s disguised as a book on retirement. I recommend the book for anyone under 27 years old because they are young enough to embrace the ideals of this book and shift their lives accordingly.
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