During your twenties, retirement may seem too distant for attention. Even so, the best time to begin planning for retirement is during your early years in the work force.
Why should you begin planning at this stage of the game?
- People are living longer, and you need savings to last up to 20 to 30 years or more.
- Early planning and savings increase your chance of achieving your retirement goals.
- Accidents or other unforeseen circumstances may interrupt your future earnings and savings.
- Investments need time to grow through compounding, which generates earnings on the reinvestment of interest or dividends.
There are four main tasks for retirement planning in your twenties:
- Evaluate your desired retirement living situation and goals: If you plan to travel the world when you retire, your needs will vary significantly from those who would like to retire to live a quiet life in the country. Your retirement plans aren’t set in stone; they evolve over the years as you mature, but having a direction is first and foremost.
- Determine your financial needs: Have an idea of how much money you need to retire comfortably based on your goals.
- Create a plan to reach these goals. Gone are the days of hefty company pensions and large inheritances. Retirement planning is a surefire way to reach your goals.
- Set a budget: Make it realistic and include retirement savings. If you have access to an employer sponsored 401K plan, put it to good use – not only does it defer taxes on savings, but employers often provide a percentage match to your investment.
Beginning to plan for retirement is just one step in establishing a comprehensive estate and retirement plan and builds a solid foundation that will serve you well in your later years. An estate planning attorney can assist you with many aspects of these plans, including drafting a will, disability planning, inheritance planning, incapacity planning and more.