Successfully sailing off into the sunset starts now. Retirement planning is something you should be keeping up with throughout your life. If you can develop solid habits from the start and ensure you’re prioritizing retirement, you’ll be able to retire with a comfortable amount of money saved up. But life can get in the way, and there may be times you’re forced to put less toward your retirement — don’t let that discourage you, though. There are many ways you can make up for those times that you may be contributing less. Just keep in mind that it’s never too late or too early to start planning.
Retirement is probably the last thing you’re thinking about when you’re in your 20s. You’ve most likely just graduated and are getting started in a career. But don’t put off planning for retirement, even though it’s a ways away. This is the time to build solid financial habits that will stick with you through the years.
1. Clear your debts. This is a great time to focus on clearing your debts, particularly any that you’ve racked up from credit cards and student loans, says Money Super Market. Not only will this clear the path for you to put more toward your retirement, but it will also allow you to wipe the slate before mortgage payments and other major expenses pop up.
2. Understand compound interest. Learn the ins and outs of compound interest, and you’re more likely to be more motivated to save early. “For example, let’s assume you start putting $416 per month ($5,000 a year) in a tax-deferred retirement account that earns an average of 8 percent per year. Save for 40 years, and you’ll amass $1.3 million. Save for 35 years, and you’ll end up with around $861,500 in your retirement account. Save for just 30 years (which is how much time you’ll have if you wait until your 30s to begin saving), and you’ll have just $566,416 in savings at retirement,” writes U.S. News & World Report.
3. Start contributing to your 401(k). Try to contribute as much as you can to your 401(k) or IRA on a monthly basis, Manilla suggests. For those of you in your mid-20s, financial planners recommend saving 15 percent of your income annually for slow, steady growth. It can be tough to see that much deducted from your paycheck, but keep your eye on the ultimate prize: a comfortable retirement.