Retirement Planning Tips for Any Age, According to Experts
The best way to plan for retirement depends on your current age, financial situation and goals for retirement, but there are some general rules of thumb that can help anyone prepare for their golden years.
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I spoke to financial experts to find out their tried-and-true tips for retirement planning at any age — here’s their can’t-miss advice.
Have a Clear Vision of Your Ideal Retirement
“Envision what you want your golden years to look like,” said Nilay Gandhi, CFP, senior financial advisor with Vanguard Personal Advisor Services. “Consider what you want to do and where you want to live, and anticipate expected income and expenses, as those factors will influence financial plans. Based on those forward-looking expectations, develop a savings plan that will seek to meet those goals.”
Review Your Finances Annually
“Make it a habit to conduct a check-up on your personal finances,” Gandhi said. “At least once a year, take a few minutes to review your financial goals, investments, debts, savings and budget. Take into account any changes throughout the year, such as an income change or new mortgage payment, that may impact your finances and make any necessary adjustments. This will help keep you on top of your savings and on track to meet your financial goals.”
Always Plan For the Unexpected
“Plan for the unexpected as well,” Gandhi said. “Unforeseen expenses, such as job loss before retirement or illness, can pop up and could derail a financial plan if not considered in advance.”
Save and Invest Early, Often and Aggressively
“The biggest threat to your retirement is inaction,” said Paul Deer, CFP, vice president of advisory service at Personal Capital. “Even if it’s uncomfortable to max out your 401(k), do it if you can. At least capture any employer matching provisions, if you are so lucky to receive a match. The earlier and more aggressively you can save, the better off you will be, and you may even surprise yourself with how much you are able to put away.”
It’s never too early to start saving for retirement — even if you’re in your 20s.
“You are not too young to plan for retirement,” said Barbara A. Friedberg, investment expert at Robo-Advisor Pros. “It’s a fact that the earlier you begin investing for retirement, the less money you need. If you start investing $6,000 per year at age 25 and earn an average 7% return, at age 65 you will have approximately $1,282,000 in your retirement account. If you wait to begin investing for retirement until age 35, then it will take $12,684 per year, invested at 7% annually to achieve $1,282,000 at age 65. Sign up for your 401(k) or open an IRA today.”
Don’t Rely on Social Security
“According to the United States Social Security Administration, Social Security is on track to be depleted by 2034, at which point they will begin paying a portion of the benefits from ongoing tax revenue,” Deer said. “Don’t rely solely on Social Security; it may not fully be there when you retire!”
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Have a Realistic Understanding of When You Want To Retire
“Having clearly defined goals will help you determine how much you should have saved based on your personal goals,” Deer said. “Your savings objectives will be different if you plan to retire at 50 than if you plan to continue working past 70, for example.”
Develop Other Sources of Income
“Think about other ways you can secure sources of income in retirement outside of collecting Social Security and withdrawing from your 401(k),” Deer said. “This will not only prevent you from having all your retirement eggs in one basket, but it is also something to consider if your 401(k) balance is lower than you’d like.”
Leverage All the Resources at Your Disposal
“There are many free tools available to help you understand your financial life in more detail, and when these tools are so readily available, not leveraging them can result in a huge blind spot when it comes to your finances,” Deer said. “Simply having this information will help you understand if you are on the right track.”
Automatically Increase Your Retirement Savings Annually
“Establish auto-escalation of your retirement savings each year,” said Heather Winston, CFP, director of advice and financial planning at Principal Financial Group. “Plan features like auto-escalation can help take the guesswork out of savings by automatically increasing payroll deductions. Aim to increase savings by at least 1% annually, or anytime you receive a raise.”
Add Bitcoin to Your Retirement Portfolio
“Encourage your employer to add bitcoin as an investment option,” said Ric Edelman, founder of the Digital Assets Council of Financial Professionals. “Fidelity’s 401(k) now lets you do that.”
Or Add Other Alternative Assets
“No matter your age, alternative assets are increasingly playing a larger role in the modern investment mix of today,” said Chris Kline, COO and co-founder of Bitcoin IRA. “With headwinds like inflation affecting all markets, these types of assets can offer the diversification needed to navigate this uncharted territory. Crypto, in particular, is a universal disrupter poised to embed itself in the fabric of our daily lives. At least some exposure in this emerging asset class is quickly becoming a prerequisite to a modern portfolio.”
Manage Your Portfolio’s Risk
“This is a very important time to manage risk,” said Terry Sawchuk, founder of Sawchuk Wealth. “The world has shifted — most people just don’t know it yet. We’ve hit the fourth turning, new world order phase. The low-hanging fruit in the markets has been picked. For now, the most important thing anyone can do is preserve capital. This is risk-off. The most successful investors of all time didn’t make more money in the up markets, they just didn’t lose much in the down markets.”
Don’t Take Retirement Planning Advice From Your Friends
“Unless your friends are investment advisors with over five years of experience, click the ignore button on their financial advice,” said Scott Eichler, registered investment advisor, founder of Standing Oak Financial and author of “Don’t Play Chicken With Your Nest Egg.” “Investing, when done properly, is not easy. There is quite a bit of math and logic that may be counterintuitive to a layperson. Even if your friend’s advice is mostly right, seemingly small errors can cost big money. I’ve heard people tell friends to put money in IRAs because they can take it out at any time. That piece of sage advice could cost the person a 10% penalty and brutally high taxes.”
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Gabrielle Olya contributed to the reporting for this article.